This is a guest post from Morgan Pehme (@morganpehme), Executive Director of EffectiveNY.
If you’re not already worried about how you are going to be able to afford retirement, you will be soon enough. According to a national survey, 75% of American workers are concerned about being able to pay for retirement, and with fewer businesses offering pensions or 401(k) programs to their employees, that already deeply concerning statistic is more than likely only going to get worse.
Just in the New York City metropolitan area, 59% of workers have no retirement plan whatsoever. Demographically, these affected individuals are disproportionately young people, freelancers, employees of small companies, African Americans and Latinos.
With millions of middle-class and low-wage workers just within the five boroughs struggling to cope with this vital concern there is no question that this is a key income inequality issue for the city, state and nation to address. Yet currently there is no plan to strengthen the social safety net on the federal level, and many younger New Yorkers believe that even if Social Security were enough money to live on in the city—which it currently is not—that there is a decent probability that its life-saving benefits may not necessarily be around for them to receive by the time they are of retirement age.
So what can be done to tackle this crisis—if anything?
EffectiveNY has a solution: Retirement Security for All.
The brainchild of EffectiveNY’s founder, Bill Samuels, Retirement Security for All would create a pooled savings trust open to all of New York’s private workers who do not currently have a retirement plan through their employer. This public option for retirement savings would enable these workers to contribute a percentage of their income to a fund that would be managed by the city, much like public sectors workers do with their pensions. As this fund would easily exceed $1 billion, its immense size would be leveraged to achieve a comparably high rate of return to that of New York City’s pension funds, while keeping fees far lower than those changed with 401(k)s.
Best of all, the cost to the government would be minimal, as there is already an existing infrastructure in place to administer such a fund and its operating costs would be covered by the workers’ contributions.
This innovative solution is not an ivory tower impossibility. Public Advocate Letitia James has stepped up as its champion and recently introduced a bill in the New York City Council (Int. 692) to create a blue-ribbon commission to study how best to implement this initiative. A number of City Council members have already signed on to this legislation and it is EffectiveNY’s aim to get many other members on board to support it over the coming months as it works its way to the floor for a vote.
That’s where you come in. We need every New Yorker to spread the word about this critical initiative and to encourage their elected officials to join this fight for our future. Right now, the Public Advocate’s bill would just affect New York City, but it is our aim to expand this momentous income inequality campaign statewide, as occurred with the successful push for universal pre-K. Illinois, California, and Massachusetts have already passed similar legislation and with New York charging into the mix, our hope is to build the momentum for this effort to become the model for a nationwide program.
To get involved in EffectiveNY’s fight to create Retirement Secruity for All, email me at email@example.com or call 646-706-7247. And for more information about this initiative, visit http://effectiveny.org/pfa-4/.
EffectiveNY is a nonprofit watchdog group and public policy think tank dedicated to discovering and implementing innovative solutions to New York’s greatest challenges. Follow us on Twitter @effectiveny.