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Stopping the "Silver Tsunami:" Why Maryland Must Pass New Retirement Savings Laws

MD Hank Greenberg Director of AARPMD
The following is written by AARP Maryland's State Director, Hank Greenberg. AARP is working hard to enact legislation for the Maryland Secure Choice Retirement Savings Program and Trust, Senate Bill 312 and House Bill 421. Contact your legislator today!

The headlines were alarming: “Task Force says 1 million working Maryland residents have virtually no retirement savings” and talk of a "silver tsunami.” This from a report issued in March by a bipartisan task force convened by Maryland’s former democratic Gov. Martin O'Malley. The report was full of dire warnings and statistics about the looming crisis for retirees and governments because of the problem of lackluster private retirement savings. According to the National Institute on Retirement Security, the typical working-age household has only $3,000 in retirement assets, while near-retirement households only have $12,000. That means more and more retirees will be depending on Social Security. In Maryland, the average Social Security benefit is $1400 a month. Almost 20 percent of Social Security recipients in Maryland rely on Social Security for 90 percent or more of their income. And 39 percent rely on it for 50 percent or more of their income. That’s not a lot of money, and that’s a problem.

We need a renewed focus on financial security for all Maryland residents. For this reason, AARP Maryland and Maryland Small Business support The Maryland Secure Choice Retirement Savings Program and Trust, Senate Bill 312 and House Bill 421. In addition to the task force report’s release in March, there were hearings in Annapolis on both bills.

AARP Maryland working for Secure Choice retirement savings.
AARP has been working with its volunteer corps to ensure Secure Choice legislation is passed.

AARP Maryland, Maryland Business and many other groups testified at the hearings in support of these efforts. We recognize that there is a need to establish a retirement savings plan and a requirement that small businesses make this plan available to their employees. While some are concerned that secure choice would hurt business, the fact is that Maryland’s small businesses want to support their employees and help them build secure retirement savings. The reason many small businesses are not able to offer plans is because they face obstacles to setting up workplace savings plans. Secure choice gets rid of many of those obstacles.


Learn about the eight ways that Secure Choice would help Marylanders

The Secure Choice proposal provides for a trust, oversight and protections for the employer and the employee. Just like the state’s successful 529 plan, Secure Choice would be a safe investment option. Secure Choice would make it easy and convenient for small businesses to offer workplace savings plans. A Secure Choice Plan takes minutes to set up and would go a long way to set small business owners and their employees on the road to a secure retirement.

Another real benefit of the Secure Choice Plan is that it gives individuals and small businesses a choice. People choose if they want to participate, and how much they want to contribute. And small businesses that want to offer plans to employees can choose their own plan or the default Secure Choice trust. And with Secure Choice, employers are not required to make any contribution at all to the employee plan.

Right now, more than half of all workers are not covered by an employer-sponsored pension, according to an analysis of Federal Reserve data by the Center for Retirement Research. When employers give workers the option of payroll deduction for retirement savings, their participation rate is 1,300 percent higher than those who don’t have an option, research shows. Almost 90 percent of workers choose to participate in plans with automatic enrollment such as Secure Choice. In Maryland, over 1 million workers could participate in either the Secure Choice Trust or another retirement plan of their choice.

Maryland, like the rest of country, faces a retirement challenge. Forty-five percent of working-age households nationwide have no retirement savings. This is the bad news. With retirement savings, families will feel secure knowing that their loved ones are financially prepared. And, the need for emergency government assistance will be alleviated. The good news is Secure Choice would greatly help our state’s workers meet the retirement challenge. If we're going to be successful in the fight against poverty, then we must start thinking outside the box to create new retirement plan models. Every worker deserves an opportunity to retire with dignity after a lifetime of working hard and playing by the rules. Adopting the Maryland Secure Choice Retirement Savings Program would go a long way toward making retirement more secure in Maryland.

Learn more about the main ways that Secure Choice would help Marylanders, and help us TAKE ACTION NOW by contacting your legislators!

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