Saving for retirement has always been a challenge; however, that burden has been growing over recent years. Considering that if you’re planning to retire on just Social Security and you’re single, you may only be living on $1,518 a month, or $18,216 a year, according to recent data from the Social Security Administration. This makes retirement programs a necessity, and most Americans agree that state-facilitated retirement programs are a good idea to help build a sizeable nest egg for retirement.
According to the National Institute on Retirement Security, approximately 72% of Americans say that state-based retirement programs would be beneficial, with high support across party and generational lines. Over 70% of millennial, Gen X, baby boomer and silent generation respondents said they would participate in a program if offered. In fact, the silent generation gave state-based retirement programs the most support.
State-facilitated retirement programs have been shown to strengthen retirement security, with low fees, higher returns than a bank savings account, portability from job to job and automatic enrollment. Americans view these key features very favorably, with 84% supporting benefit portability, 82% favoring higher returns as well as lower fees.
According to the Boston College Center for Retirement Research (CRR), half of U.S. households will not have enough retirement income to maintain their standard of living in retirement, the NIRS reports. There have been calls to address the system, such as universal employer program coverage.
The NIRS noted that only about half of workers participate in either a defined benefit plan or a 401(k) account. Most workplace programs offer employer contributions, making it one of the biggest advantages of employer-sponsored retirement plans.
Although state-based retirement programs cannot match contributions, they can improve retirement savings via a paycheck deduction. However, they shouldn’t be considered a replacement for workplace retirement programs. In the best-case scenario, the state-facilitated programs will push more employers to offer retirement programs to their employees.
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