Colleen Davis is Delaware’s state treasurer.
October is National Retirement Security Month, a time to focus on the importance of financial planning and preparation for retirement. With today’s uncertainty and rapid changes in the economy, National Retirement Security Month underscores the importance of proactive planning and financial literacy to ensure a comfortable and stress-free retirement.
While this annual observance serves as a reminder for us to prioritize our financial futures, I see this as a year-round effort. Since taking office, I have focused on three main priorities: bolstering retirement security and readiness, creating pathways to economic empowerment and promoting a culture of financial excellence. While retirement might be years away for many, decisions we make today about our finances can have huge implications for our quality of life in our later years.
Sadly, many individuals are ill-prepared for retirement. According to U.S. Census Bureau data, 50% of women and 47% of men between ages 55 and 66 have no retirement savings. At the same time, what had been the two primary ways of funding retirements in the past, Social Security and pensions, can’t be relied on as heavily moving forward.
The future of Social Security is uncertain. As the population continues to age and the number of retirees grows, there is a growing concern about the long-term sustainability of Social Security. According to the Federal Reserve, only 22% of workers still have defined benefit pensions. Most employers have shifted retirement benefits to 401(k)s, which are less expensive to manage and put the investment risk on the employee. Unlike with pensions, 401(k) plans don’t offer guaranteed retirement payouts, which are instead determined by the performance of the investments in the plan.
We want to make sure we do everything possible to give Delawareans security, simplicity and dignity in their retirement. The Delaware Expanding Access for Retirement and Necessary Savings Program will expand access to workplace retirement plans making it easier for people to save. Once underway by January 2025, EARNS will provide a convenient way for all workers to save for retirement, particularly middle- and low-income workers who lack access to employer-sponsored plans and small businesses that are unable to provide such a benefit.
For state employees, my office offers DEFER, the voluntary retirement program (457(b), 403(b) and 401(a) savings plans) available to most state of Delaware employees. Participation in the deferred compensation plan is a critical component of a balanced plan for retirement, alongside Social Security, pension and personal savings. I also believe it’s time to keep a promise made to state employees back in 2008, when the recession forced Delaware to suspend the employer match to retirement contributions, and bring it back.
National Retirement Security Month is more than just another item on the calendar. It’s a reminder of the urgent need for Americans to take action to secure their financial futures and ensure a comfortable retirement.
The steps you take today will affect how you spend tomorrow.
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