Millions of Americans lack access to retirement security as their employer failed to provide it. It is one of the responsibilities of the employer to provide a retirement plan for their workers; however, some of them cannot afford the startup costs of a plan.
The worker’s lack of access to retirement plans also affects the taxpayers, as reported by Pew Charitable Trust. A 2022 study by Econsult Solutions, a Pennsylvania-based economic consulting firm, found that insufficient savings increase public assistance costs, decreased household spending, reduced tax revenue, and a more significant burden on a decreasing tax base.
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Lack of Savings Will Cost Taxpayers $17.8 Billion Over 15 Years
According to Pew Charitable Trust, the financial vulnerability in Pennsylvania is expected to increase by 17% from 2022 to 2035, based on households with people aged 65 and older with less than $75,000 annual income. As these workers age, their inadequate retirement savings will likely force retirement income reductions and increase the state spending for Medicare and other assistance programs.
There is also an expected increase in the age dependency ratio of nearly 29% from 2020 to 2035. This means that there will be fewer workers to support a growing elderly population.
See: Over 50% of Americans Nearing Retirement Age Have No Retirement Savings
Call to Action
Pennsylvania lawmakers have introduced the Keystone Saves Act to address the financial strain of a growing older population. The bipartisan retirement savings bill aims to expand the ability of people to save when their employers do not provide a retirement plan. Accordingly, if a Pennsylvania household saved an additional $1,890 a year or around $36 a week – it could erase the taxpayers’ burden and ensure a standard of living in retirement.
The bill would create an individual retirement account (IRA) program that automatically enrolls workers without access to employer-based benefits. Other twelve states have already adopted the Keystone Saves Act.
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