What is your vision for retirement? Sunny beaches, romantic travels or idyllic sunsets at your ivy covered home?
Sadly, a secure retirement is out of reach for millions. “Forbes” says that 55% of us retire with less than $10,000 in savings and 42% retire dead broke.
The Federal Reserve reports that 40% of retirees can’t afford a $400 car repair bill without borrowing money.
The North Carolina chapter of AARP conducted a summit in Raleigh on Oct. 24 to examine why many people aren’t preparing for retirement, the public costs of this and how we can ensure richer (financially and otherwise) retirement years.
The event was both alarming for what it revealed and encouraging as to what we can do.
North Carolina is getting older. In 1960, the median age in our state was 25 ½ years.
By 2018, it was almost age 39. Twenty percent of our population is projected to be over 65 by 2025.
More than a third of North Carolinians surveyed by AARP said they feel anxious about having enough money to live comfortably after they retire; 80% worry that cost of living expenses will eat up what savings they accumulated.
A perfect storm is brewing. More of us are getting older, fewer have sufficient funds for a comfortable retirement and Medicaid and other public assistance programs will increasingly be required, costing more taxpayer dollars.
Without accompanying tax increases, less money will be available for roads, education and other public infrastructure.
The obvious solution is that we need to save more for retirement, but, why don’t we?
Saving hasn’t been a part of our culture. We want instant gratification and easy credit allows us to buy what we want.
Generations before us saved for what they wanted before purchasing it. Further, the income gap puts increased pressure on middle to lower income families just to get by. But the biggest reason people don’t save is because it isn’t convenient or easy.
Plans sponsored by employers make it easy and painless to have savings deducted from paychecks.
We don’t miss it, and there’s added incentive if an employer has some sort of match to contributions.
About 1.6 million North Carolinians, which is about 50% of the 18-to-64-year-old population, don’t have access to a savings plan where they work.
Small businesses lack the funding or the administrative ability to offer retirement plans.
AARP is sponsoring an effort to get more state-sponsored retirement plans, where employees of small businesses can begin saving.
Already 10 states have initiated these plans because they benefit employees and the state.
Craig Galbraith from the University of North Carolina at Wilmington, estimated that if low-to-moderate-income North Carolinians saved 3% of their incomes, North Carolina would save $450 million on Medicaid and nearly $20 million on Special Assistance for Adults between 2017 and 2030.
The N.C. House has passed a measure to study the best ways to make it easier for our citizens to save for retirement.
The Senate has yet to pass the measure, but all of us should encourage our Senators to pass this study bill.
Not only does it make good cents (spelling is intentional), it will make retirement years more enjoyable for millions of us.
Tom Campbell is former assistant state treasurer and is creator/host of NC SPIN, a weekly statewide television discussion of North Carolina issues that airs on UNC-TV.