Many in New Jersey, as they approach what should be their golden years, are instead experiencing financial uncertainty. A life spent as an active member of the workforce no longer provides the same benefits or long-term financial security as once was the case. This is, in part, because access to employer retirement programs is shrinking. Our economy, communities, and families will all continue to bear the increasing burden of these conditions if this issue is not properly addressed.
The AARP issued a report stating 1.7 million of New Jersey’s workers, more than half of the state’s workforce, do not have access to a retirement savings plan through their employer. To compound the issue, according to New Jersey Citizen Action, those more likely to be without a secure retirement are women, people of color and small business employees.
Many New Jersey residents are faced with no other option than to continue working well beyond their desired retirement age. The average retired New Jersey resident receives only $19,000 a year in Social Security benefits, while the average senior family spends $23,000 a year for basic necessities. Without access to a retirement savings program through an employer earlier in their life, many older New Jersey residents are too often relegated to living in poverty or reliant on their kids to get by. I, along with Sen. Troy Singleton and Sen. Shirley Turner, have sponsored legislation addressing these conditions so that our residents have the tools to prepare for a more financially secure future.
Our legislation, S-2891, will establish the New Jersey Secure Choice Retirement Savings Program, and greatly reduce the burden of retirement planning placed on workers and small business owners. Many small business owners want to provide a retirement program to their employees, but simply can’t afford it or administer it. Under our proposal, those who work for businesses with 25 or more employees would be automatically enrolled in a privately run and professionally-managed retirement plan, unless they choose to opt out. Workers utilizing the program would see a standard payroll deduction on their paycheck, showing their contributions, their savings and how they have grown every pay period.
The amount a worker wishes to contribute would default at a manageable three percent that could be changed at their discretion. Also, the account is portable, meaning it accompanies the employee if they move from one job to another. This will give workers a safe and reliable option for retirement planning and savings at a time of greater employment mobility where workers are far more likely to move from job to job.
Establishing the ability to save for the future will be easier than ever for workers, and this plan imposes no cost or liability on the state or the business owners. Employers would simply process another payroll deduction and employees would have greater opportunity to save successfully.
The statistics are undeniable and provide us with the reality of what seniors and those preparing to retire in our state are facing. AARP reports that workers are 15 times more likely to save for retirement when they have access to a plan through work and 20 times more likely when retirement is automatically deducted out of their pay.
New Jersey Secure Savings Program is a streamlined path for private-sector employees to save for retirement in a convenient and efficient way. Our workers deserve a structure in place to help them prepare for the uncertainty of the future, and as public servants we must ensure one is implemented. All of our workers deserve a financially secure retirement.
Joseph Lagana, a Democrat, represents the 38th legislative district in the New Jersey Senate.
See the article on NorthJersey.com