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PORTLAND — New research by the University of Maine commissioned by AARP Maine reveals the fiscal impact of inadequate retirement savings in the state, and that the workforce moving into retirement is increasingly reliant on public assistance, AARP Maine announced.
The report signals a trend that could have important fiscal implications for the state, a news release from the organization said.
“Insufficient savings for retirement increases older Mainers’ reliance on social services,” said Amy Gallant, AARP Maine advocacy director in the release. “With savings for retirement continuing to decline the problem is only worsening.”
Last year in Maine, spending for Mainers aged 65-79 receiving social services such as Medicaid, SSI, SNAP and housing assistance reached $164 million, with about $28 million financed by the state, AARP Maine said. Maine’s retirement age population, those older than 65, is projected to increase 30 percent between 2016 and 2032. The cost of those social services is expected to increase to $362 million in 2032, with the state’s share growing to $61 million or 2.2 times greater than in 2016.
The report shows, however, that increasing retirement income through greater pre-retirement savings could substantially reduce taxpayer contributions for, and older Mainers’ reliance upon, public assistance. For example, an additional $1,000 in individual retirement income would save Maine taxpayers $15.6 million by 2032.
Philip Trostel, a University of Maine professor of economics, spearheaded the research. “This report can serve as a catalyst for change,” he said in the release. “Helping workers save during their career will reduce government spending for retiree benefits. It is important for the state of Maine to consider options that will create more vehicles for workers to save toward retirement through their workplace.”
AARP said that states are finding ways to solve the problem, by removing the regulatory and operational barriers for small businesses that want to offer their workers a way to save for retirement, including setting up public private partnerships that work like a 529 college savings plan for retirement. More than 30 states are taking bipartisan action to enact this legislation. Yet, the U.S. House voted on and passed H.J. Resolution 66 and 67, repealing Department of Labor guidelines allowing states the flexibility needed to pass this legislation, according to the release. AARP urges the Senate not to take up these resolutions, the release said.
“This study shows that states can ill afford to wait to tackle the retirement security crisis, and it is out of touch for Congress to put roadblocks in front of states that want to take preventative action,” said Gallant.
