Board Recommends CT Create a Retirement Savings Program
HARTFORD, Conn. - Creating a voluntary retirement savings plan could help more than a half-million Connecticut residents who have no workplace pension plans. That's the conclusion of the Connecticut Retirement Security Board, appointed to study the issue.
John Erlingheuser, advocacy director for AARP Connecticut, says the board found that creating a payroll savings plan is financially feasible, and wouldn't impose a burden on taxpayers.
"Based on their recommendations, it looks like it is something that we could move forward in Connecticut, and get to a point of solving the retirement savings crisis that we have," says Erlingheuser.
Studies indicate workers are fifteen times more likely to save for retirement through a payroll deduction plan than they would on their own.
The Center for Retirement Research at Boston College estimates that nationwide, there is a $6 trillion retirement savings deficit among older Americans. According to Erlingheuser, in 2012, the average 401K account balance in Connecticut was under $30,000.
"If you look at that as the average balance, and what you would need from the time you retire for the next 20 or 25 years," he says. "That certainly isn't going to go far enough."
Erlingheuser points out that the average Social Security benefit is between $13,000 and $15,000 a year, which means with little money saved, many retirees could end up living in poverty.
"It's actually going to just create bigger problems for not only the individuals, but for the state of Connecticut and for the country, because it requires more and more reliance on safety-net programs," he says.
The Retirement Security Board will now begin working with lawmakers to draft legislation creating a retirement savings plan. Erlingheuser believes it could be ready by the end of the current legislative session in May.