Survey: Two-thirds of Texas workers may be ill-prepared for retirement

Concerns raised about future reliance on public assistance programs

AUSTIN, Texas—An uncertain economic future may be in store for the two-thirds (66 percent) of private sector workers without an employer-offered retirement plan, based on a survey of 501 small business owners in Texas released today by AARP. Nearly three-quarters (74 percent) of small business owners surveyed said that, as taxpayers, they are concerned about these workers and their families not saving enough and ending up reliant on public assistance programs.

The survey also showed overwhelming support for new measures to encourage Texans to save for retirement, with 82 percent expressing that sentiment.

“A financially secure retirement is out of reach for many Texans and prospects look even more daunting for those looking to retire a decade or two from now,” said Tim Morstad, who oversees AARP’s financial security work in Texas. “It’s critical that we solve this looming crisis before it impacts small business competitiveness in Texas. It’s a win-win proposition for workers, employers and the Texas economy.”

Morstad is testifying this morning before the Texas House’s Pensions, Investments and Financial Services Committee, which has the interim charge of exploring retirement savings options and small business competitiveness. In his testimony, he says the current situation may lead to millions of Texans becoming increasingly dependent on Social Security upon retirement.

For more than half a century, a secure retirement was based on reliable income from three sources: employer-provided defined-benefit pensions, personal savings and Social Security. But diminishing pensions and inadequate retirement savings—coupled with longer life expectancies and higher health costs—could put the dream of a secure retirement out of reach for millions of Texans. The average Social Security payment in 2018 was $1,495 per month, or $17,941 per year, a far cry from the average cost of living in Texas.

Morstad also notes in his remarks that race and ethnicity play a factor in access to retirement plans, with non-white workers accounting for 64 percent of workers who lack an employer plan.

Key findings from the AARP survey included:

• 62 percent of small business owners said they do not intend to offer a retirement savings plan for their employees, while just 27 percent said they would.

• Of those employers who currently offer a retirement savings plan, the most popular vehicles are 401k or 403b plans (36 percent), followed by IRAs and Roth IRAs (26 percent) and simplified employee pension plans or SEPs (15 percent).

• The two biggest reasons that small businesses chose to offer plans were “because it is the right thing to do” and to “attract or retain quality employees.”

About the survey: The 2020 Texas Small Business Owner Survey contacted 501 small business owners or decision makers about employee benefits at companies with 1-100 additional employees. Interviews were conducted from January 30 to February 24, 2020. The margin of error for the sample is plus or minus 4.4%. The sample, including owner names and companies, came from a Dunn & Bradstreet business list.