The AARP reports that many Americans 45 and older are tapping into the future retirement accounts just to cover day-to-day expenses.
One of two reports, “Retirement Security or Insecurity?” says that 20 percent of Americans have stopped contributing to their retirement accounts during the past year. That further jeopardizes their long-term retirement plans.
The second report, “The Coverage of Employer-Provided Pensions: Partial and Uncertain,” finds that millions of Americans do not have the ability to save for retirement.
“Individuals already feel like they aren’t saving enough for retirement and the current economic situation is depleting what little they have,” said Jean Setzfand, Director of Financial Security at AARP.
The organization encourages people to save every little bit they can and that saving at work through an Automatic IRA plan can help more Americans reach their retirement dreams.
AARP, the American Association for Retired Persons, lobbies for Americans over the age of 50, is spearheading an Automatic IRA legislation that will address access to savings through employer-sponsored plans, particularly for small employers. Currently about 44 percent of workers at small companies have access to an employer-sponsored savings plan.
Setzfand added. “Women and minorities are especially at risk, and the Automatic IRA could help bring them one step closer to achieving their retirement dreams.”
Employer-sponsored pension plans has typically not reached above 50 percent of the workers. And there are disparities in coverage, with coverage rates low for employees of small firms. Better educated and white Americans have better coverage rates.
Hispanics face even more hurdles when planning for retirement. AARP’s surveys show that Hispanics are less likely than non-Hispanic Whites to be saving for retirement outside of work – 31 percent versus 60 percent; and are the segment of population that is least likely to have access to a workplace retirement savings plans (about 30 percent vs. about 50 percent).
A House subcommittee recently discussed requiring companies enroll employees automatically in IRAs. Several pending bills address the concept, especially for women and small business owners. Companion bills HR 5543 and S 1288 include a provision to require companies that have been in business for at least two years and have more than 10 employees to allow direct-deposit payroll deductions to IRAs. #