Denver, Colorado – The dream of retiring comfortably is becoming increasingly unattainable for many Americans, as the perceived amount needed for a comfortable retirement continues to rise. According to a recent survey by Charles Schwab, the latest target amount for retirement savings is $1.8 million, up from $1.7 million the previous year. However, only 37% of workers believe it is very likely they will reach this goal.
The survey highlights the growing pressure on individual responsibility for retirement savings, as the U.S. retirement system heavily relies on personal savings habits, investment choices, and access to employer-provided retirement plans. Data from the Economic Innovation Group reveals that as of 2021, 69 million workers, or 55.5%, did not have access to any employer-provided retirement plan, with low-income earners being disproportionately affected.
The study also found significant disparities among states in terms of access to retirement plans provided by employers. Idaho emerged as the state with the highest percentage of low-income workers (47%) with access to an employer-provided retirement plan, while Florida ranked as the worst state with only 23% of low-income workers having access.
Addressing the issue, Sen. Thom Tillis, R-N.C., emphasized the impact of this lack of access to employer-sponsored retirement plans, stating that approximately 40 million Americans are affected and face significant barriers to achieving financial security for their retirement. In response, Sens. Thom Tillis and John Hickenlooper, along with Reps. Lloyd Smucker and Terri Sewell, introduced the Retirement Savings for Americans Act (RSAA) to Congress for the second time, aiming to improve retirement security and financial well-being for low- and middle-income American workers.
The RSAA features key provisions such as eligibility and auto enrollment for workers without access to employer-sponsored retirement plans, as well as federal contributions to support low- and moderate-income workers. It also emphasizes the portability of accounts and a range of investment options to aid in wealth and financial security building.
The bipartisan bill has garnered support from various sectors and organizations, including financial services company Charles Schwab, which expressed strong support for the act. Additionally, the American Association of Retired Persons (AARP) fully endorsed the RSAA, highlighting the significant number of Americans without retirement savings and the importance of providing access to retirement savings options at work.
Overall, the increasing target amount for retirement savings, coupled with disparities in access to employer-provided retirement plans, underscores the pressing need for legislative measures to improve retirement security and financial well-being for American workers.