Americans were once able to rely on a “three-legged stool” of Social Security, pensions, and savings to ensure a secure and dignified retirement. Today, that stool is broken. Yes, Social Security remains as a solid pedestal for our retirement.
But pensions are shrinking or non-existent and workers are more apt to have debts than savings. As a result, more and more Americans face poverty and insecurity as they age into retirement.
This hardship of aging, imposed by private and public policy-making, can be overcome by creating and embedding multiple supports for economic security for all workers and retirees. First, build on the pedestal that remains –Social Security – by augmenting federal benefits. Second, advance universally accessible voluntary retirement accounts. Third, as this brief outlines in more detail, develop a progressive state-level supplemental social insurance system.
While enhanced Social Security benefits and universally accessible voluntary retirement accounts will improve economic security for low- and middle waged retirees, their retirement income will still be substantially reduced, compared to their pre-retirement compensation. This lack of money will impinge on their lives and life choices, on their health care and health
outcomes, and on their quality of life.
Now is the moment for states to take the lead in creating, re-creating or enhancing state social insurance programs that solve this poverty of retirement. This proposal will both augment retirement security and fund other key social insurance programs such as family leave insurance and temporary disability insurance.
In Washington State, with a workforce of 2.9 million workers, and an average
annual wage of $46,400, a 1% payroll premium would raise approximately $1.3 billion a year. Of this, $158 million, or .12% of payroll (less than 2 cents per hour per low-wage worker), would provide universal family leave benefits (about 35,000 recipients a year) and temporary disability benefits (about 40,000 participants a year) of $250 a week for 8 weeks. 0.88% of payroll, almost $1.2 billion, would be devoted to the state supplemental social security system.
Restoring Retirement Security:
The program will immediately benefit over one million Washington
residents, and over time will generate benefits for over two million participants annually.
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