At 73 years old, Kitty Ruderman enjoys being retired. She volunteers with a number of nonprofits, including AARP, advocating on behalf of folks like herself. She’s grateful to have no major health issues draining her energy or her bank account. But with her rent higher than her Social Security income, she’s worried. If her cost of living doesn’t go up – if she doesn’t get sick, if her rent doesn’t increase, if she has no new expenses – she estimates that she can maintain her current lifestyle for another 10 years. After that, she doesn’t know.
Middle- and low-income New Yorkers increasingly struggle to pay the bills and even seniors like Kitty, who worked for decades saving for retirement, are among those hit hardest by the City’s affordability crisis.
The most recent data show that more than one third of New Yorkers between the ages of 50 and 64 have less than $10,000 saved for retirement. Most of these folks are disproportionately people of color. White 50-plus New Yorkers’ retirement incomes are almost double that of black, Asian and Latino New Yorkers, and the majority of 50-plus New Yorkers of color are likely to retire with incomes near the poverty threshold.
Too many New Yorkers are facing the very real possibility that they will have to rely solely on Social Security income in their retirement or will not be able to retire at all. This is even more true for New Yorkers of color who are significantly less likely than their white counterparts to have workplace retirement savings opportunities. This is neither acceptable, nor sustainable.
Sadly, the situation is not much better for younger generations. There are roughly 3.5 million private-sector workers in New York City, and over half don’t have access to any kind of retirement savings plan at work. If we don’t act now, we can expect to see this crisis continue.
Data shows people are a full 15 times more likely to save for retirement if an employer offers a plan. Under the “Retirement Savings for All” proposal currently before the City Council, employees will be automatically enrolled in a retirement account, with the choice to opt out, increasing retirement security for millions of New Yorkers.
Not only will the program help working New Yorkers, it will do so without any cost to businesses or taxpayers. To help ensure that their employees are able to retire comfortably, employers will only need to add the payroll deductions. Employers won’t contribute to the accounts, nor would any public funds be directed to the accounts.
Left unaddressed, the retirement savings crisis facing our seniors could have a dire impact on our economy. Residents aged 50 and up represented more than $70 billion in consumer spending in 2011. A survey conducted by AARP found that over half of all Boomers, and two-thirds of Gen X say they will likely leave the City because they can no longer afford to live here. Their significant spending power will be lost if they flee.
All New Yorkers deserve the opportunity to save for retirement, plan for their future, and to be able to retire with dignity. We have a simple yet innovative solution in front of us that will help working New Yorkers without putting a financial strain on businesses or taxpayers.
With Workplace Retirement Savings we can improve the wellbeing and security of millions of New Yorkers. It’s the financially responsible thing to do, but more importantly, it’s the right thing to do.
Beth Finkel is the New York state director of AARP. Ben Kallos is a New York City councilman representing district 5, who is also bill sponsor of Intro. 901 and retirement security attorney. I. Daneek Miller is a New York City councilman representing the 27th district, and also the chair of the Committee on Civil and Labor, and Retirement Security for All. Miller is also a sponsor of Intro. 901.