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by Brian McGuire, Associate State Director, Advocacy, AARP New Jersey
If you stop people on the street across New Jersey today and ask them if they’re financially ready for retirement, chances are the answer you’ll get is “no.” Even for those who have been saving, most are not satisfied with the amount of money they have set aside. The bottom line is that more and more New Jerseyans are unsure they’ll have enough money to retire comfortably. In order to get to that point, we need a renewed focus on financial security for all generations.
We all start investing in our retirement the first day we enter the workforce. From that first paycheck to the last, those Social Security contributions are one way we help ourselves with our own financial security. And there are lots of other ways we can plan for our future. How exactly we go about doing so varies widely – as does our prospects for having the type of life we’ve planned on in retirement.
Traditionally, financial security has been thought of as a three-legged stool. In order to be financially secure in retirement, you needed a pension, private savings and Social Security. Today, however, the first two legs of that stool are much shorter than they used to be.
What’s changed? Workplace pensions were more common and personal savings more robust for previous generations. In contrast, most of today’s workers have 401K plans instead of pensions with defined benefits, and many of those plans have lost value during the recession. At the same time, many of these same families have seen their personal assets wiped out by dramatic declines in the housing market.
And, according to the National Institute on Retirement Security, the typical working-age household has only $3,000 in retirement assets, while near-retirement households only have $12,000. Here in New Jersey, 1.7 million people – or 53.5% percent of workers – do not even have access to a retirement plan at work.
Social Security has been the one constant in this era of pensions and savings change. Today, it remains a critical “leg of the stool,” with nearly 21% percent of New Jersey seniors relying on it for 90 percent of their income. Given these broad trends, tomorrow’s seniors will likely be more reliant on Social Security than ever before.
And it’s important that we don’t allow the benefits that people have already earned to be eroded. While Social Security in and of itself is not a retirement plan, it is an essential part of financial security in retirement. That is why New Jerseyans of all ages need to become strong advocates, not just in opposition to harmful cuts, but in support of a stronger future for this invaluable program.
AARP has and will continue to push for a separate, responsible debate about the future of Social Security to protect benefits and strengthen the system for future generations. New Jerseyans can take control of their financial future by joining this conversation.
But, for true financial security in retirement, New Jerseyans need savings other than just Social Security. Research shows that far too many New Jerseyans are not prepared for retirement. Unless we start to expand access to retirement savings accounts this trend could grow into a crisis. If nothing is done to address our retirement deficit, the state budget will be saddled with a growing burden in the future as older adults are forced to rely more and more on the public safety net.
Rebuilding the promise of financial security in retirement must include modern, expanded options. It will require increased personal responsibility from workers and it will require state government to make financial security a greater priority.
Brian McGuire is the Associate State Director, Advocacy, AARP New Jersey.
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