This savings shortfall accompanies dramatic declines in the number of workers in New York City who have access to employer-sponsored retirement plans, whether pensions or 401(k)-type savings. Specifically, the study found:
• More than one-third of New Yorkers nearing retirement age have savings of less than $10,000, which means they will have to subsist on Social Security income or not be able to retire at all.
• Between 2000 and 2009, the percentage of employees in New York City who had access to employer-sponsored retirement plans declined from 48% to 40% – below the U.S. average, which is 53% (2009).
• Only 35% of New York City workers participated in an employer-based retirement plan in 2009.
The study, called “Are New Yorkers Ready for Retirement?”, sounds an alarm bell. When a significant percentage of New Yorkers can’t afford to fund their own retirement, it not only creates stress and suffering for them but also affects the health of the City’s economy as a whole and has profound implications for policy makers. More workers need more access to employer-sponsored plans.
Without retirement savings or income, too many elderly New Yorkers will be forced into poverty. Others may rely on their children who, in supporting their parents, may delay saving for their own retirements and so on down the line.
Overall, employers have become less willing or able to sponsor pensions – a trend that is true across most industries and occupations and affects New Yorkers of nearly all ages and income groups.
The shortfall in retirement security foretells declining standards of living and a hollowing out of the City’s middle class. As we endeavor to emerge from these tough economic times, we need to build an economy that works for everyone. If we don’t, we’re laying the groundwork for the next crisis.
For more on the report, click here.
John C. Liu is the 43rd Comptroller of the City of New York.