As senior living providers grapple with the discrepancy between what many retirees are prepared to pay for their housing and care needs, and the costs involved in providing that care, one organization is pointing to big differences among states that factor strongly into the equation.
Most research today indicates the majority of retirees are not prepared, but state factors can play a major role in retirement success, according to a new report by The National Institute on Retirement Security.
Based on NIRS’s research, retirees in Wyoming stand to fare best among all states. That’s because major retiree costs are lower there, on average; potential future retiree income is higher; and Wyoming ranks highly in terms of older adult labor market opportunities. The state also has a relatively low unemployment rate for older workers, at 3.7 percent, versus the national average 5.3%.
In California, Florida and South Carolina, in particular, retirees face serious shortfalls. In California, that’s due to low potential retirement income, low workplace retirement plan access and high retiree costs; in Florida, retiree costs are high and wages and retirement plan access are low; and in South Carolina retirement income potential is low, as are labor market scores.
States where retirees stand to fare best—Alaska and Minnesota, in addition to Wyoming—offer strong labor markets and lower retiree costs. Yet still those states are challenged in the potential retirement income they offer to retirees.
The study authors noted the wide discrepancies between states, stressing that states must fill in some of the gaps to help retirees meet basic needs.
“The largest source of retirement income for most Americans is Social Security, but this critical federal program typically provides only a part of the income working families need to be self-sufficient,” said Diane Oakley, NIRS executive director. “State programs must fill the gap and help Americans meet their most basic needs for food, shelter and medicine. The good news is that some states like California and Illinois already have enacted legislation to reduce future retiree poverty by encouraging workers to save today.”
But for today’s retirees in the worst-off states, meeting retirement needs is getting tougher, said Hank Kim, executive director and counsel with the National Conference on Public Employee Retirement Systems, begging for more solutions retirees can use; both public and private.
“This research project makes it abundantly clear that achieving financial security in retirement is an increasingly elusive goal for Americans,” he said. “The findings give policymakers yet another reason to explore innovative approaches, such as the Secure Choice Pension, which draws on the documented performance and efficiencies of public sector pension management, and extends it to those in the private sector,” Kim said.
Written by Elizabeth Ecker