In “The Bottom Line,” President Trump donor Norm Champ details how the Biden-Harris rule is hurting Americans' retirement savings.
Tens of millions of private sector workers lack access to retirement savings plans through their employers, which experts at AARP's Public Policy Institute warn could pose a significant burden to future taxpayers. There is.
The institute estimates that 57 million U.S. private sector workers (about half of the workforce) are not offered either traditional pensions or retirement savings plans through their employers, a problem that has been around for decades. said senior strategist David John. Policy advisor for AARP.
An April AARP survey found that 20% of adults over 50 have no retirement savings, and more than half fear they won't have enough money to support them in retirement. It became.
John said people in their 50s or early 60s who are retiring without sufficient savings are in the midst of a crisis.
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For society as a whole, he said, “It's not a crisis right now, but it's pretty inevitable that it will be.”
“This is a very serious issue and one that affects all of us, because if we don't have a small amount of retirement savings to supplement Social Security, 'Because you're paying taxes to help people who didn't have that opportunity,' John said.
According to AARP research, 20% of adults over 50 have no savings for retirement. (Annette Riedl/Photo Alliance via Getty Images/Getty Images)
If many people do not have adequate retirement savings, they may need more public assistance, such as nonprofit or government programs. This may include support for medical needs, housing, and other essential services.
To help, more than a dozen states have launched or are implementing state-backed retirement savings programs for small businesses, John said.
Small businesses are more likely than large businesses to not offer retirement savings benefits to their employees. The Pew Charitable Trusts, citing data from the Bureau of Labor Statistics, shows that as of 2023, 57% of private companies with fewer than 100 employees offer retirement plans. However, 86% of companies with 100 or more employees and approximately 91% of companies with 100 employees do not offer a retirement plan. At least 500 workers did so.
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For small businesses, the main focus is often on keeping the business running, and there is little time or resources to handle such tasks. But state programs like CalSavers, California's retirement savings program for workers who don't have the means to save for retirement at work, can help small businesses at no cost.
More than a dozen states have already established or are implementing state-sponsored retirement savings plans for small businesses. (license/image)
Greg McBride, chief financial analyst at Bankrate, told FOX Business that the bigger problem is that most workers don't realize they can make individual contributions to retirement accounts without relying on their employer. spoke.
“What consumers are missing out on is that just because they don't have access to a retirement savings plan through their employer doesn't mean they can't save for retirement on tax-advantaged terms,” McBride said. .
If individuals filing joint taxes or their spouses have earned income, they may be eligible to contribute to an Individual Retirement Account (IRA), which provides tax benefits for retirement savings.
It is estimated that 57 million private sector workers in the United States are not offered either a traditional pension or retirement savings plan through their employer. (image/image)
According to the IRS, there are several types of IRAs available, including traditional IRAs, which are tax-advantaged personal savings plans in which contributions are tax-deductible; This includes Roth IRAs, which are tax-advantaged personal savings plans. However, qualified distributions may be tax-free.
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“A lack of employee-funded retirement benefits is not an impediment to saving for retirement,” McBride said, although he acknowledged that it is more difficult. There is no employee match, and contribution limits for IRAs are lower than for workplace-based plans, McBride said.
Still, we don't believe enough employees are using these accounts.
