AARP: Retirement Dreams Falter As Economy Slumps
Auto IRA Possible Solution for Millions Who Have No Workplace Savings Options
Source: AARP Press Center | 2008-10-07
October 7, 2008
Contact: Danielle Holland, AARP, 202-434-2560, dholland@aarp.org
WASHINGTON –AARP today released two reports examining the state of Americans’ retirement and financial security. The findings of these reports paint a bleak picture for retirement dreams right now and in the future. The first report, “Retirement Security or Insecurity? The Experience of Workers Aged 45 and Older,” finds that 13 percent of Americans 45 and older are tapping into their retirement accounts, or other investments, to cover day-to-day expenses. It also found that 20 percent have stopped contributing to retirement accounts during the past 12 months, which is further jeopardizing their long-term retirement dreams. For millions, saving for retirement at work is not an option at all.
The second report by AARP's Public Policy Institute found that about 51 percent of workers do not have pension coverage at their current job. In that report, “The Coverage of Employer-Provided Pensions: Partial and Uncertain,” AARP found that millions of Americans still lack the ability to save for retirement at work as businesses shift the burden of risk toward employees.
“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. “Many people are making quick-fix decisions that put their financial future at risk. Admittedly times are tough, but saving every little bit helps. Not only do we need to maintain the rate at which we are saving, but we need to increase access so more individuals have the option to save at work. One way to accomplish this is through the Automatic IRA, which can help more Americans reach their retirement dreams.”
Because those who work for small employers are less likely than other employees to have access to employer-sponsored retirement plans, AARP has spearheaded the Automatic IRA legislation in order to increase the possibility of retirement for more Americans. Currently, only 44 percent of employees working for employers with less than 100 employees have access to an employer-sponsored plan.
The Automatic IRA would put a payroll deduction mechanism in place for individuals who work for a business with more than 10 employees, that has been in business for two years and does not currently offer a retirement plan for their employees.
“Millions of hard-working Americans deserve an opportunity to begin a regular retirement savings program at their place of work,” 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.”
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).
For more information about the Automatic IRA or to view full copy of the reports mentioned, visit http://www.aarp.org.
“The Coverage of Employer-Provided Pensions: Partial and Uncertain” can be found at
http://www.aarp.org/research/work/benefits/d19108_pensions.html
“Retirement Security or Insecurity? The Experience of Workers Aged 45 and Older” can be found at http://www.aarp.org/research/work/retirement/retirement_survey_08.html
AARP is a nonprofit, nonpartisan membership organization that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. AARP does not endorse candidates for public office or make contributions to either political campaigns or candidates. We produce AARP The Magazine, the definitive voice for 50+ Americans and the world's largest-circulation magazine with over 33 million readers; AARP Bulletin, the go-to news source for AARP's 40 million members and Americans 50+; AARP Segunda Juventud, the only bilingual U.S. publication dedicated exclusively to the 50+ Hispanic community; and our website, AARP.org. AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.
