Millions of Americans are approaching retirement age without adequate retirement savings. The ongoing foreclosure and financial crisis and declines in housing values wiped out trillions in savings and home equity that people counted on using to help support themselves later in life. American workers, particularly those nearing retirement, are deeply concerned about income insecurity and fear that they will outlive their savings. Without adequate savings, American workers face the prospect of a decline in their standard of living during retirement.
The negative impact of the lack of adequate retirement savings will fall not only on the individual workers involved; it will also have adverse impacts on the rest of the economy.
One of the principal sources of investment capital for the private sector will shrink, and the public sector will face increasing demands to address the needs of the growing numbers of older Americans living in poverty. Helping workers save for retirement should be a high priority for policymakers, according to 78 percent of people surveyed.
The purposes of this report are to identify the principal sources of retirement income, examine the extent and types of workers facing retirement insecurity, and explore the necessary components of a state-level public policy solution that could help to address the problem. Using employment data by industry and estimated retirement plan sponsorship rates, this report shows how many workers in Illinois, especially those in industries with traditionally low-wage workers, lack access to one of the mainstays of retirement income: a tax-deferred, employment-based retirement savings plan. The report concludes with a discussion of the essential components of a state policy that would expand access to tax-deferred, employment-based retirement savings plans.
Note: Appendices D and E of this report were updated in February 2014 to reflect new state legislative district boundaries implemented in 2012-2013.