Tennessee lawmakers are considering legislation that would set up a voluntary retirement savings program for employers and employees. (401kcalculator.org/Flickr)
NASHVILLE, Tenn. — More than a million Tennesseans don’t have access to a retirement savings program through their employer – and AARP’s Public Policy Institute estimates that people are 15 times more likely to save for retirement through a payroll deduction program.
Those two facts are what’s driving a bill in the state Legislature that would create a voluntary retirement savings program available to employers and their employees. Small business owner Tom Piech owns ValuePetSupplies.com and said it wasn’t easy to set up a 401(k) program for his employees.
“As a small business person, I know how difficult it is to set up a retirement savings plan for your employees,” Piech said. “It would be just another tool in our financial toolkit to help us all save for retirement.”
AARP of Tennessee is among those supporting the legislation, which is sponsored by members of both parties. The organization released the results of a survey this week showing 89 percent of registered voters in the state wish they’d saved more for retirement, and 77 percent support a state retirement savings option.
According to the AARP Public Policy Institute, if Tennesseans are able to save $1,000 a year, the state could save $260 million in future years by spending less on social services.
Shelley Courington, advocacy director at AARP Tennessee, said a voluntary savings plan could benefit the entire state.
“It’s going to be a game changer for the state,” Courington said. “If we can start to make that shift for these million folks who don’t have access to retirement savings through their job, just think about what that will be when they have the ability to save and don’t rely exclusively on Social Security.”
Piech said many people may feel like they can’t save for retirement, but a few dollars a week adds up over time.
“It’s the old story of ‘Pay yourself first,’” Piech said. “And at first, when you start saving just a few dollars a week, it doesn’t seem like very much. But all of a sudden, at the end of the month, at the end of the year, at the end of three years, four years, you have a little pile of money there, and that alone is incentive to keep on saving.”
California, Illinois, Oregon, Connecticut, Maryland and Massachusetts have a state-run retirement savings program. Tennessee’s program would be the first in the country to be voluntary – programs in other states are mandated.
Stephanie Carson/Veronica Carter, Public News Service – TN