Closing New York’s retirement savings gap

Over half of New York’s Gen X and Baby Boomer voters feel they’re not saving or planning enough for retirement – but it’s even worse for women.

In analyzing a survey of 800 registered voters ages 35-69 statewide and 800 in New York City, AARP found that by about 10 percentage points, women, more so than men, feel they’re not saving enough, not planning enough for retirement, carrying too much student loan and other debt, and are unable to pay their bills.

The state can help close the gap – and give millions of New Yorkers a better chance to prepare for retirement and reduce their reliance on public assistance in the future.

Why are women disadvantaged?

They’re more likely than men to work part-time and to take time out of the workforce to care for children and aging family members. That reduces their earnings and future retirement benefits.

Older women are less likely than men to be married – meaning they’re more likely to have lower family income.

And women live five years longer than men on average but are less likely to find jobs later in life because of age discrimination, according to a recent study of over 40,000 job applications. So they need to stretch their retirement assets further.

Yet more New Yorkers of both genders are being shut out of workplace retirement savings plans as fewer employers offer pensions and 401(k)s.

Payroll deduction is the most effective tool to save for retirement; Americans are 15 times more likely to save if they can do so through payroll deduction. But over half of New York’s 18- to 64-year-old private sector workforce – more than 3.5 million New Yorkers – lack access to payroll deduction savings plans at work.

The problem is compounded for women, who don’t get equal pay for equal work in the first place and, as noted, face other key disadvantages.

The state could take a giant step toward helping to bridge this gender gap and fend off a looming retirement savings crisis by passing Secure Choice, legislation that would create a voluntary, state-facilitated payroll-deduction option for most New Yorkers who lack one.

On Tuesday, I was pleased to stand alongside bill sponsor Sen. Diane Savino and key co-sponsor Assemblywoman Donna Lupardo to unveil our analysis and to make the case for Secure Choice.

And I was proud to be joined by over 100 AARP volunteers across the state, who spent most of the afternoon urging state legislators to pass Savino’s bill, which is sponsored in the Assembly by Robert Rodriguez.

Secure Choice is no radical idea – Illinois, Connecticut, Maryland and Oregon have passed laws similar to the Savino/Rodriguez bill. The elected leaders of New York City announced plans earlier this year to craft and enact a similar plan for the Big Apple.

And President Obama has encouraged states to devise retirement savings plans. At his direction, the federal Department of Labor developed regulations aimed at helping states stay within the strictures of the federal Employee Retirement Income Security Act as they do so.

Gov. Andrew Cuomo is listening, and we commend him for that. Earlier this year, he announced plans to establish the Saving More to Achieve Richer Tomorrows Commission to study the lack of retirement savings among New Yorkers and develop potential solutions.

Secure Choice is the ideal remedy. It would carry no ongoing cost to state taxpayers and only a nominal one to employers. But by providing an easy way for working New Yorkers to take advantage of the most effective avenue for building a retirement nest egg – payroll deduction – the benefits would be huge. With a small helping hand from the state, New Yorkers would have the opportunity to take control of their own financial futures and build a more secure and financially independent retirement.

Seven of every 10 New York Gen X and Baby Boomer voters like the idea, our survey found. But even among them, there’s a disparity. Support among women was 75 percent, and 65 percent among men.

It’s time for the state to close the gap – and head off a looming retirement savings crisis.

Beth Finkel is state director of AARP in New York. She lives in New York City.