UMaine, AARP Maine, Release Report on Fiscal Impact of Insufficient Retirement Savings

 

DATE: March 14, 2017

FOR IMMEDIATE RELEASE:

Contact:      Jane Margesson, AARP Maine Communications Director

(207) 229-5628 or jmargesson@aarp.org

                

University of Maine, AARP Maine Report on Fiscal Impact of Insufficient Retirement Savings

Improved Retirement Savings for Workers Could Save the State $15.6 Million by 2032

 

PORTLAND: New research by the University of Maine commissioned by AARP Maine reveals the fiscal impact of inadequate retirement savings in the state.  “ The Fiscal Implications of Inadequate Retirement Savings in Maine” shows that an aging Maine workforce moving into retirement is increasingly reliant on public assistance, signaling a trend that could have important fiscal implications for the state.

“Insufficient savings for retirement increases older Mainers’ reliance on social services,” said Amy Gallant, AARP Maine Advocacy Director.  “With savings for retirement continuing to decline the problem is only worsening.”

Last year in Maine, spending for Mainers 65-79 receiving social services such as Medicaid, SSI, SNAP and housing assistance reached $164 million, with about $28 million financed by the state.  Maine’s retirement age population, those persons over 65, is projected to increase 30 percent between 2016 and 2032.  The cost of those social services is expected to increase to $362 million in 2032, with the state’s share growing to $61 million or 2.2 times greater than in 2016.

The report shows, however, that the fiscal cost does not necessarily have to grow at this rate.

Increasing retirement income through greater pre-retirement savings could substantially reduce taxpayer contributions for, and older Mainers’ reliance upon, public assistance.  For example, an additional $1,000 in individual retirement income would save Maine taxpayers $15.6 million by 2032.

Professor of Economics at the University of Maine, Philip Trostel, spearheaded the research.  “This report can serve as a catalyst for change,” he explained. “Helping workers save during their career will reduce government spending for retiree benefits.  It is important for the state of Maine to consider options that will create more vehicles for workers to save toward retirement through their workplace.”

States are innovating to solve this problem by removing the regulatory and operational barriers for small businesses that want to offer their workers a way to save for retirement. The solution: setting up public private partnerships that work like a 529 college savings plan for retirement. More than 30 states are taking bipartisan action to enact this legislation. Yet, the U.S. House voted on and passed H.J. Resolution 66 and 67, repealing Department of Labor guidelines allowing states the flexibility needed to pass this legislation. AARP urges the Senate not to take up these resolutions.

“This study shows that states can ill afford to wait to tackle the retirement security crisis, and it is out of touch for Congress to put roadblocks in front of states that want to take preventative action,” said Gallant.

 

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AARP is a nonprofit, nonpartisan organization, with a membership of nearly 38 million that helps people turn their goals and dreams into 'Real Possibilities' by changing the way America defines aging. With staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, AARP works to strengthen communities and promote the issues that matter most to families such as healthcare security, financial security and personal fulfillment. AARP also advocates for individuals in the marketplace by selecting products and services of high quality and value to carry the AARP name.  As a trusted source for news and information, AARP produces the world’s largest circulation magazine, AARP The Magazine and AARP Bulletin. AARP does not endorse candidates for public office or make contributions to political campaigns or candidates. To learn more, visit www.aarp.org or follow @aarp and our CEO @JoAnn_Jenkins on Twitter.