Editor's note: This blog post was authored by Karen Harris, Director of Asset Opportunities at the Shriver Center.
For many retired Americans, the potential for financial insecurity is great. Although our government provides a modest monthly Social Security check ($1,152 on average) to retirees, Social Security was never meant to be the sole source of an individual’s retirement income. While $1,152 might be just barely enough money for a young healthy individual, being elderly is much more expensive. Among people who reach the age of 65, 70% will eventually require long-term health care and 30% will eventually receive nursing home care. The average cost of a semi-private nursing home room is $215 per day or $78,000 per year. Yet, according to the Social Security Administration, Social Security benefits constitute 50-90% of income for more than 33% of Social Security Recipients, and 90 to 100% for more than 31% of recipients. This means that about two out of three Social Security recipients over-rely on Social Security.
In order for retirees to avoid over-relying on Social Security, they must prepare during their working years. However, 49% of Americans say they are not saving any money for retirement. A 2012 Woodstock Institute Report shows that the lack of savings is primarily a problem of access to savings mechanisms. The report finds that across all Illinois state legislative districts at least 50% of full-time workers are not offered an employer sponsored retirement savings plan. As the Assets Report infographic shows, lower-income workers are much less likely to have access to these plans.
In order to address this widespread retirement problem, the Illinois Asset Building Group (IABG), along with the Shriver Center, AARP, SEIU and many other organizations are working to pass S.B. 2400/H.B. 2461 The Automatic IRA Program Act. This bill, sponsored by Senator Daniel Biss and Rep. Deborah Mell, would provide all full time workers in Illinois access to retirement savings accounts.