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Majority of Virginia Voters Want State Savings Plan for Retirement

GRAPHIC: Virginians are worried they don't have enough saved for retirement, and a recent poll found voters strongly in favor of a voluntary commonwealth program of payroll deductions. Graphic by AARP, based on U.S. Census data and polling results.
GRAPHIC: Virginians are worried they don't have enough saved for retirement, and a recent poll found voters strongly in favor of a voluntary commonwealth program of payroll deductions. Graphic by AARP, based on U.S. Census data and polling results.
January 15, 2015

RICHMOND, Va. - Virginians overwhelmingly want the state to set up a voluntary retirement program modeled on 529-style college savings plans.

A poll done for AARP Virginia found residents are worried they won't have enough savings to retire. The poll also found three out of four voters favored a voluntary program in which the state would gather payroll deductions in order to get a higher return.

David DeBiasi, AARP Virginia director of advocacy, says 1.3 million employees in the state don't even have a retirement plan through their employer, and the average Virginia household only has $3,000 saved.

"We are in somewhat of a retirement crisis," says DeBiasi. "Traditional pensions are gone. Social Security was never meant to be the only source of retirement income. We really need to help people build their own retirement savings."

The program would be voluntary for everyone and cost nothing for employers. DeBiasi says the state would have some up-front costs, but little after that. AARP wants the General Assembly to study the issue.

According to DeBiasi, investment fees would come out of payroll deductions like an Individual Retirement Account (IRA). Ordinarily, the higher returns of something similar to an IRA would be out of reach for most working Virginians. DeBiasi says it costs Virginia taxpayers more if less-affluent residents of the commonwealth don't have adequate savings.

"Investment companies are not really interested in people who just want to invest $2,000 a year," he says. "It's not worth their time, but this saves taxpayer dollars in the long run because it means fewer Virginians are going to need to rely on safety-net services."

Some critics have argued retirement savings should be solely left to the private market, but DeBiasi argues that approach isn't working well now. Without the state to set up the payroll deductions, he says it's very hard for most people to set anything aside.

"Only one out of 20 people will go down to a broker and get an IRA. But 13 out of 20 will take advantage of payroll deductions. People just don't do it unless it's easy."

Dan Heyman, Public News Service - VA