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Column: Help more workers save for retirement

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Thinking about the future is not always easy.

It’s easier to kick the can down the road and do nothing.

But a recent study prepared for the state Legislature’s Retirement Savings Task Force found more than a billion reasons to do something — this year — about the worsening retirement savings crisis in Hawaii.

The study estimates that the state is spending $56 million in 2022 on medical care and other government social services on kupuna households without adequate retirement savings. That spending — paid for by taxpayers — rises to $106 million by 2040, totaling $1.72 billion over 20 years if we do nothing.

If we can get more workers to save for their later years, we can reduce government spending and take a huge bite out of the $1.72 billion in additional state social services costs.

Fortunately, the state Senate is doing something to increase savings. Senate Bill 3289 passed unanimously last week. The bill would act on the recommendations of a legislative task force and create a Hawaii retirement savings program to make it easy for all workers to save for retirement at work.

If you’ve ever lived paycheck to paycheck, you know you spend whatever you are paid every month. But if money is taken out of your paycheck before you get a chance to spend it, you adjust your spending and are much more likely to save.

More than 200,000 workers in Hawaii don’t have access to payroll savings. Many of these workers are employed by small businesses, which find it too complicated, time-consuming and expensive to offer a workplace savings program.

The Senate solution is based on successful workplace savings programs already offered in California, Oregon and Illinois. The programs are a public-private partnership similar to college 529 savings plans. The state sets up the program and appoints a board to oversee it. But the actual investing and holding of workers’ money is through private financial services companies. Monies are secured in individual Roth IRA accounts for each worker, and the accounts go with the worker if they leave their current job.

So far, more than 440,000 workers have saved $410 million in the three states operating automatic IRA programs. The average income of savers in California, a high cost-of-living state, is $25,000 and the average amount saved is $150 a month. Nearly 70% of workers participate when offered the chance to easily save at work.

Polling conducted for a marketing study in Hawaii found that 80% of small businesses support creating a Hawaii retirement savings program and would participate. Working voters also think lawmakers should create an automatic IRA savings program in Hawaii, and many say they are concerned about their retirement and the potential future tax burden caused by insufficient savings.

A House bill similar to SB 3289 died because House leaders did nothing. They did not even hold hearings so that House members could hear from the public about the proposal. Tell your state representative that doing nothing is not an option.

SB 3289 is a common-sense solution that will help more workers save their own money for a better future. If more workers save, then all of us win. Small businesses will be able to access a new benefit that may help them keep good workers. Taxpayers will see a reduction in future social service spending. Most importantly, workers and their families will have a chance to save their own money for a financially secure future — to travel, spend time with grandchildren and enjoy a well-deserved retirement.

Lack of retirement savings by Honolulu Star-Advertiser

Keali‘i Lopez is the state director of AARP Hawaii, a nonprofit, nonpartisan organization dedicated to empowering Americans 50 and older to choose how they live as they age.

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