Older NYers want to help millennials save for retirement

Mar 9, 2017

Beth Finkel, AARP New York State director, stands with 10,000 postcards that the group delivered to lawmakers to urge support for a new retirement plan option for those without pensions or 401(k) plans.
Credit Karen DeWitt

Members of a leading senior citizens lobbying group are advocating for a retirement plan in New York that could benefit their children and grandchildren.

The proposal by AARP could help address a big change in employer practices that’s occurred since the group’s members – who are 50 and older – began their working lives. That is the sharp decline in companies that offer pensions, or even 401(k) retirement accounts, leaving younger workers with no opportunities at work to save for their retirement.

The group’s New York director, Beth Finkel, speaking at a news conference in a busy State Capitol corridor, said it’s a growing concern, with more than half of the workforce now lacking access to retirement plans.

“There are 3.5 million New Yorkers who work in private industry and go to work every day,” Finkel said, “and don’t have an opportunity to save in the workplace for their own retirement.”

AARP is backing a bill that allows workers with no access to retirement plans to put a portion of their paychecks into a portable, state-sponsored Roth IRA. They would be able to take the Roth IRA with them to a new job and keep contributing as much or as little as they want. Finkel said it won’t cost businesses any money, but they would be required to alter their payroll forms to accommodate the IRA contributions.

“This is not about government having to put in any matching money,” Finkel said. “This is a mechanism to allow people to save for themselves.”

Smitha Varghese, a junior at Queens College, has not entered the working world yet but she’s already thinking about her retirement. She said she saw what happens when someone grows older without having made provisions.

“My mother had a pension. My father didn’t. He didn’t have a 401(k),” Varghese said.

Her mother got cancer and passed away, leaving her father to raise her and three siblings.

“He struggles a lot,” she said.

Her father is now 67, still working, and will be for the foreseeable future.

Varghese started thinking about how the lack of a pension or 401(k) could play out in her older years. She joined an effort by the New York Public Interest Research Group to get state government to help facilitate an alternative.

“Millennials, we hop to different jobs,” Varghese said. “There’s a change going on and legislation should support this change.”

The measure has majority party sponsors in each house who hope it can be approved as part of the state budget.

But the state’s Business Council opposes the measure, saying they already have enough paperwork to deal with right now implementing the state’s new paid family leave program, which also requires a payroll mechanism for employee contributions.

The Business Council also said Gov. Andrew Cuomo already has announced plans for a commission to study options for government-sponsored alternative retirement plans, called NY SMART, and they’d like to see those results first.