EVERETT — Two-thirds of people in their 40s and 50s are not saving for retirement today, whether by not being given a company pension or by not putting in themselves, and that’s unnerving to those in charge of the state’s financial future as it could strain the Treasury.
So leaders are strategizing.
State Treasurer Mike Pellicciotti, state labor council president April Sims, Cathleen MacCaul of AARP Washington and a speaker from the nonprofit thinktank the Economic Opportunity Institute came to Everett last week as part of a “retirement futures” tour.
They wanted the crowd’s thoughts on four retirement funding systems not currently in Washington state.
One proposal is that Washington implements mandatory retirement accounts, where businesses are required to set aside automatic IRA contributions from an employee’s paycheck for the employee’s retirement benefit. (Employees can opt-out.) The state manages the IRA. Oregon launched the first Auto-IRA six years ago.
Another proposal is a Multi-Employee Plan (MEP), where companies pool together to co-operate a retirement plan under an investment administrator.
A third proposal hybridizes the MEP with an Auto-IRA: Employees get put into an Auto-IRA if they don’t have their own retirement account or an available MEP.
The fourth is a retirement marketplace, which Washington does already.
MacCaul said to start small — put away $5 or $10 at a time. Protect your savings, because life can, and will bite with unforeseen expenses, she said. Adult children moving back home is an example.
They polled the crowd of 15 people. One-dozen were retirees; about one-third in the room had pensions. Some were following the Treasurer’s tour, coming from places such as Clallam County to talk against the privatization of Medicare. (Pellicciotti said he hasn’t heard this at a state level.)
Social Security pays back what you put in, so working a low-wage job leads to a low monthly Social Security check in your senior years.
Seniors on fixed incomes are ending up losing their homes to property tax foreclosures with no way to restart late in life, Ellen Menshew of Port Angeles said.
What are the costs? Medicare supplements, for one, which can cost $140 a month, Menshew told the Tribune.
MacCaul has seen it. She worked in a homeless shelter before. She said there’s a common denominator among older women who end up homeless: They lost their spouse, or had a major medical cost, and the expenses left not enough to pay the property tax bill.
On top of this, during COVID-19, many who were laid off tapped into their 401(k)s for living expenses. Many over age 50 couldn’t get back in: the job market shunned them because they didn’t know how to work mainstream office software packages, MacCaul described.
There are 1.1 million people in the state have no access to a workplace savings account such as a 401(k) or Payroll Deduction IRA, MacCaul cited.
A pension is the bedrock of a union job. the head of the AFCSME Council 2 union said. Few non-union jobs offer a pension anymore, panelists noted.
The Treasurer’s office will compile the answers this fall to write a report to the Legislature, a rep at its office said.
To send a comment, write to watreas@tre.wa.gov or PO Box 40200, Olympia, WA 98504 or call 360-902-9000.
