How States Are Working to Address The Retirement Savings Challenge
Most Americans are not saving enough to pay for their retirement years. A majority of workers do not have a retirement savings plan through their employer, and less than 10 percent of all workers contribute to a plan outside of work.1
Not surprisingly, lower-income families are least likely to be saving. According to the U.S. Bureau of Labor Statistics, only 40 percent of private sector workers with wages in the lowest quarter of earners have access to retirement programs through their employers or unions.2
The failure to save enough—or save at all—has an impact on Americans in their working years and later in life. With life expectancy on the rise, workers’ efforts to prepare for retirement face threats from inadequate investment returns, large or unexpected expenses, and inflation. These risks affect all Americans, but those who have saved for retirement have a real advantage.
Government can play a role in helping Americans save for retirement. Policy tools range from offering incentives, such as tax breaks for contributions or for setting up a plan, to providing consumer protections for retirement plan participants. Congress and the Obama administration have proposed approaches to increase retirement savings, but no major federal legislation has passed on this issue since 2006.3 That inaction has led state policymakers to look for opportunities to fill the gap.
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