Today’s job prospectors want to know about benefits such as health insurance premiums and deductibles, maternity and paternity leave, vacation accrual and comp time. Living paycheck to paycheck focuses your attention on covering monthly bills rather than setting some aside for a nest egg.
And so, is it any surprise just 56% of N.M. workers age 50 or older have any retirement savings at all – and only 27% of them have stashed away $10,000 or more?
That’s likely in great part because 62% of New Mexico’s private-sector employees, about 336,000 workers, have zero, zip, nada access to a retirement savings plan through their employers, according to AARP. That lack of savings makes retirement a hard place in New Mexico, considering the average Social Security benefit in our state is just $13,900 a year, less than half of the $28,000 the U.S. Bureau of Labor Statistics says is needed for food, housing and health care.
If our retirees only knew then what they know now and had had an avenue to save a bit every paycheck.
House Bill 44, the New Mexico Work and Save Act, sets up a web-based method for future New Mexican retirees to help themselves. It creates voluntary state-sponsored Individual Retirement Accounts, similar to Roth IRAs, in which self-employed and private-sector employees could have payroll deductions placed into retirement savings plans. The cost would be minimal, as New Mexico would be able to join forces with any of the 10 states that already have adopted a similar setup, and modest fees capped at 1% are to ensure the system is self-sustaining within five years.
It’s not mandatory – businesses choose to participate, as do employees, who can determine how much to contribute from each paycheck, up to $5,000 a year. And we all know saving is easier if you don’t see that $5, $10, etc. in your paycheck; you don’t miss it. And as it accumulates in that retirement account, earning compound interest, the prospect of having to make ends meet on $13,900 a year becomes less likely.
The bipartisan bill cruised through the House by a 62-1 vote and is now in the Senate with just a week left in the session. HB 44 is a much-needed effort at preventing another generation of retirees from falling into poverty. The Senate should pass this bill and get it to the governor so more New Mexicans have the option to build their nest eggs through payroll deductions.
This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.