Pushing to Help Texas Workers Save for Retirement

At Fresh Pressed Coffee Co. in Copperas Cove, a retirement savings plan isn’t a benefit that owner Nicholas Haffter Von Heide holds out to would-be employees.

“It would be nice to offer it,” he said. “It’s not something that’s easy for a small company to do.”

Fresh Pressed Coffee, which wholesales to retail outlets, is hardly alone, an AARP analysis of workplace retirement plans in Texas found.

About three-quarters of Texans working for companies with fewer than 100 employees do not have access to a pension or retirement savings plan. In all, nearly 60 percent of the state’s private-sector workers—5.4 million people—have no savings plan through their employers, the analysis found. 

“We have a retirement insecurity crisis in Texas,” said Tim Morstad, AARP Texas’ expert on consumer issues. “Too many people are coming into retirement years unprepared because there are too many barriers preventing Texans from saving their own money for retirement.”

Nationally, the median savings for households nearing retirement is just $14,500, according to the National Institute on Retirement Security. That means many people will rely solely on Social Security, Morstad said.

That lack of savings is why AARP supports creating a state-administered savings program that would give all employees the ability to participate through an automatic deduction from their paychecks.

Making saving easier

Under the proposed Secure Retirement Savings Program, employers would add a deduction to paychecks, with zero cost to the employer. For employees, the account would be portable. When they switch jobs, their savings would go with them.

“AARP Texas wants to make it easier for people to save their own money,” Morstad said. 

Five states are operating such “work and save” programs, and eight more are in the process of setting them up.

The Texas version, outlined in bills introduced this year in the Legislature, would be administered by a board of trustees headed by the state comptroller,  managing either individual retirement accounts (IRAs) or a type of 401(k). 

Research shows that when money is automatically deducted from paychecks and sent directly into retirement funds, workers are 20 times more likely to save.

An AARP survey in March of Texas small-business owners found that most said they do not offer retirement plans because they are either too costly or too complicated to operate.

They also said it would help them attract workers if they could offer a savings option similar to that of larger employers.

Morstad said the survey findings are being used to educate lawmakers and the business community and to build support for the program. It would be up to each worker to decide how much to save.

Overall, giving employees a simple way to save for retirement may mean fewer Texans will need to rely on public assistance later in life, which in turn will save taxpayer dollars.  

“There’s value across the board,” said Haffter Von Heide, 40, who started his coffee bean business three years ago. “I like the plug-and-play aspect of it. It’s simple, like a good cup of coffee.”

Thomas Korosec is a writer living in Dallas. 

More on Retirement Planning

• Saving enough for retirement? Use our calculator

• 7 signs your retirement is on track