WASHINGTON--(BUSINESS WIRE)--A new analysis indicates that Americans in nearly every state will fall far short in meeting their economic needs in retirement. The State Financial Security Scorecards research project gauges the retirement readiness of future retirees in each of the fifty states and the District of Columbia in three key areas: anticipated retirement income; major retirement costs like housing and healthcare; and labor market conditions for older workers.
The research finds that the lowest ranking states include:
- California due to low potential retirement income, low workplace retirement plan access and high retiree costs.
- Florida due to high retiree costs, low wages for older workers and low workplace retirement plan access.
- South Carolina due to low potential retirement income and low labor market scores.
The highest-ranking states include Wyoming, Alaska, Minnesota and North Dakota due to their relatively strong labor markets and lower retiree costs. However, each of these states with a favorable outlook is weak in terms of potential retirement income for retirees. For example, North Dakotans have an average defined contribution retirement account balance of only $27,700 – nowhere near the level of accumulated savings required to ensure self-sufficiency through retirement.
An interactive map with access to the State Financial Security Scorecards is available here. A summary presentation of the research project is available here.
These state scorecards are designed to serve as a tool for policymakers to identify areas of focus for state-based policy interventions that will strengthen Americans’ ability to financially prepare for retirement. The State Financial Security Scorecard project provides a two-page summary of the economic outlook for retirement security in every state. It considers trends in retirement plan participation rates in each state, evaluates average savings levels in individual retirement accounts in relation to median income and considers current poverty levels in each state.
A webinar to review the findings is scheduled for Thursday, July 30, 2015, at 11:00 AM ET. Register here. Webinar speakers include:
- Kathleen Kennedy Townsend, Task Force on Retirement Security for All Marylanders chair and former Maryland lieutenant governor;
- Diane Oakley, National Institute on Retirement Security executive director; and
- Hank Kim, National Conference on Public Employee Retirement Systems executive director.
“We developed the State Financial Security Scorecards to dig deep and really understand the root causes of why future retirees will struggle in some states,” said Diane Oakley, NIRS executive director. “Now, policymakers have a tool to identify the most urgent priorities and can take action to head off the looming retirement crisis in their states,” Oakley said.
“The retirement savings shortfall has become increasingly important at the state level because policymakers know it can have a deep impact on strained state budgets. The largest source of retirement income for most Americans is Social Security, but this critical federal program typically provides only a part of the income working families need to be self-sufficient. State programs must fill the gap and help Americans meet their most basic needs for food, shelter and medicine. The good news is that some states like California and Illinois already have enacted legislation to reduce future retiree poverty by encouraging workers to save today,” Oakley added.
“Out of crisis comes opportunity. States now are trying different ways to make sure that middle class workers don’t fall into poverty once they stop working, which harms individuals and their families,” said Kathleen Kennedy Townsend, Georgetown University Center on Retirement Initiatives founder and former Maryland lieutenant governor. “This new tool can help policymakers get a better read on financial security issues in their state, and enact sensible policies to help Americans get back on track when it comes to preparing for retirement,” she explained.
“This research project makes it abundantly clear that achieving financial security in retirement is an increasingly elusive goal for Americans,” said Hank Kim, executive director and counsel with the National Conference on Public Employee Retirement Systems. “The findings give policymakers yet another reason to explore innovative approaches, such as the Secure Choice Pension, which draws on the documented performance and efficiencies of public sector pension management, and extends it to those in the private sector,” Kim said.
This State Financial Security Scorecards come on the heels of the NIRS 2015 public opinion research released earlier this year revealing that an overwhelming majority of Americans (86 percent) believe that the nation faces a retirement crisis. Americans strongly support state action to address retirement insecurity the research found: 71 percent said state sponsored retirement plans are a good idea and 75 percent of Americans said they would participate.
These State Financial Security Scorecard project was conducted by Diane Oakley, NIRS executive director with support from AARP. The State Financial Security Scorecards build upon a 2014 research report, The Financial Security Scorecard, authored by NIRS and Dr. Christian E. Weller with the University of Massachusetts Boston.
The National Institute on Retirement Security is a non-profit, non-partisan organization established to contribute to informed policymaking by fostering a deep understanding of the value of retirement security to employees, employers, and the economy as a whole. Located in Washington, D.C., NIRS’ diverse membership includes financial services firms, employee benefit plans, trade associations, and other retirement service providers. More information is available at www.nirsonline. Follow NIRS on Twitter @nirsonline.