As Americans with insufficient retirement savings leave the workforce over the next 20 years, they will severely strain state and federal budgets, resulting in increased public assistance costs, reduced tax revenue, decreased household spending and standards of living, and lower employment, according to a study released by the Pew Charitable Trusts.
The study notes that as many as 56 million private sector workers currently lack access to a retirement savings plan through their jobs. Such limited savings could lead to a cumulative additional cost to the federal government of $964 billion between 2021 and 2040, while the impact to states could reach $334 billion over that period.
However, if households saved an additional $1,685 a year—about $140 a month—over a 30-year period, they could erase the retirement savings gap, eliminate the extra taxpayer burden, and help people maintain their lifestyles in retirement, the study adds.
The study discusses how more states are developing automated retirement savings plans and how these programs will help more workers save for retirement and improve their economic situation. Read more.