Washington, D.C. – With approximately 2.1 million New Yorkers set to retire in the next 10 years and approximately 5 million to retire in the next 20 years, U.S. Senator Kirsten Gillibrand today unveiled plans to help hardworking middle class New Yorkers save for retirement. Her new legislative agenda would expand tax credits that match contributions to retirement plans, protect 401(k)s with more security and transparency, and encourage automatic enrollment in Individual Retirement Accounts (IRAs) to help more middle class workers plan responsibly for retirement. Americans lost over $2 trillion in their individual retirement savings as a result of the financial crisis, making retirement harder for millions of middle class New Yorkers.
“The horrible economy is making it extremely difficult for middle class New Yorkers to save for retirement,” Senator Gillibrand said. “Every hardworking New Yorker deserves the opportunity to retire and feel safe in their golden years. To do that, we have to provide more opportunities for people to plan ahead and save for their retirement. My legislative agenda would help more middle class New Yorkers stay on track to an affordable retirement by extending tax credits that match contributions to retirement plans, protecting 401(k)s with better oversight and transparency, and making businesses automatically enroll employees in IRAs so every hardworking New Yorker can stay on a sturdy path to retirement.”
More than a quarter of New York’s population will be retiring over the next 20 years – many of whom suffered extreme losses to their retirement savings.
READ Senator Gillibrand’s report on the amount of New Yorkers set to retire over the next 20 years.
- In New York City, approximately 850,000 will retire in the next 10 years and approximately 2 million will retire in the next 20 years – almost 25 percent of New York City’s population.
- In Western New York, approximately 170,000 will retire in the next 10 years and approximately 390,000 will retire in the next 20 years – nearly 30 percent of Western New York’s population.
- In the Rochester/Finger Lakes Region, approximately 140,000 will retire in the next 10 years and approximately 330,000 will retire in the next 20 years – nearly 30 percent of the region’s population.
- In Central New York, approximately 115,000 will retire in the next 10 years and approximately 270,000 will retire in the next 20 years – over 25 percent of Central New York’s population.
- In the Southern Tier, approximately 80,000 will retire in the next 10 years and approximately 180,000 will retire in the next 20 years – nearly 30 percent of the Southern Tier’s population.
- In the Capital Region, approximately 135,000 will retire in the next 10 years and approximately 305,000 will retire in the next 20 years – nearly 30 percent of the Capital Region’s population.
- In the North Country, approximately 50,000 will retire in the next 10 years and approximately 125,000 will retire in the next 20 years – over 25 percent of the North Country’s population.
- In the Hudson Valley, approximately 265,000 will retire in the next 10 years and approximately 620,000 will retire in the next 20 years – nearly 30 percent of the Hudson Valley’s population.
- On Long Island, approximately 340,000 will retire in the next 10 years and approximately 785,000 will retire in the next 20 years – nearly 30 percent of Long Island’s population.
Since the start of the recession, Americans who invested in the stock market lost more than $2 trillion of their investments in their retirement plans. As a result, only 13 percent of Americans who are approaching retirement say they feel confident and secure enough to retire as they had planned.
Pushing retirement even more out of reach, more businesses are reducing their matching contributions to 401(k)s or other retirement accounts. According to a study by Brown & Tedstrom, less than half of workers expect to receive retirement income from their employer or government pensions as part of their retirement plan – putting more pressure on their individual retirement accounts that were hit hard by the economic downturn.
Today, Senator Gillibrand unveiled an agenda to help make retirement affordable for New York’s middle class.
Improving and Expanding the Saver’s Tax Credit for more New Yorkers
Under current law, some New Yorkers are able to receive a tax credit matching a portion of their retirement savings. The tax credit is limited to very few New Yorkers, is complex and difficult to claim, and is not refundable — meaning taxpayers with limited tax liability are unable to collect it.
To correct this, Senator Gillibrand is proposing legislation that would expand eligibility for the credit to families earning up to $85,000 a year, simplify the credit to match 50 percent of retirement savings, and make the credit refundable so lower-income families can take full advantage of the credit.
Improving Transparency and Reliability of 401(k)s
Most Americans who receive employer-sponsored retirement benefits do so through 401(k) plans, making it critical that we appropriately regulate 401(k)s to promote effective use and ensure their safety and transparency. To help protect New Yorkers 401(k)s, Senator Gillibrand is urging Senators Baucus and Harkin, Chairs of the Senate Finance and Health, Education, Labor and Pensions Committees to include changes either in pension or tax extensions that must be considered this year. Specifically, Senator Gillibrand is pushing for changes to promote the use of safe and secure financial products that provide guaranteed income in 401(k) portfolios, encourage 401(k) plans to provide unbiased retirement planning advice and prevent conflicts of interest, and promote disclosure.
Promoting Automatic IRA Enrollment
While 401(k)s are essential retirement planning tools for families that work for employers who sponsor these plans, many families simply do not have access to these benefits. Many of these workers also never enroll in IRAs that would allow them to receive tax reductions on their savings.
Nationwide, nearly 80 million Americans are not enrolled in any form of tax-deductible savings account. To help more Americans access these retirement benefits, Senator Gillibrand is advocating for a proposal to have employers automatically enroll their workers in IRAs and provide them with a tax break to help cover any administrative costs. To help advance this proposal, Senator Gillibrand is working with Senator Kohl, Chairman of the Special Committee on Aging, which she serves on, to hold a hearing on this proposal and identify how it could help preserve retirement security for middle class families.