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Tag: AARP

Can Keystone Saves bill rescue Pa. from fiscal cliff?

Financial security in retirement is important for all Pennsylvania taxpayers, and especially for Pennsylvanians aged 65 and older. But what happens when residents do not have enough money for retirement? 

Such is the dilemma facing Pennsylvania as the state seeks to deal with a looming fiscal crisis – “a fiscal cliff,” Pennsylvania State Treasurer Stacy Garrity called it – created by insufficient retirement savings. 

An online seminar addressing the impact of insufficient retirement savings on Pennsylvania’s fiscal health was hosted recently by Garrity and John Scott, project director for retirement savings for The Pew Charitable Trusts. Information in the online seminar was based on analysis prepared for the Pew Charitable Trusts by Econsult Solutions, Inc. (ESI), an economic consulting firm. 

ESI provided a 2018 analysis of economic and fiscal impact of insufficient retirement savings in Pennsylvania from 2015 to 2030 for the Pennsylvania Treasury Retirement Savings Task Force. Subsequent analysis of county-level impacts was undertaken by ESI for Pew in 2020. ESI’s report updates findings of statewide impacts of insufficient savings to cover the period from 2020 to 2035. 

According to ESI’s findings, Pennsylvania’s elderly population is expected to grow by more than 550,000 in the next 15 years, increasing from 19% to 23% of PA’s population. The share of Pennsylvania households headed by an elderly resident is expected to increase from 30% in 2020 to 36% by 2035. Pennsylvania’s dependency ratio is also projected to increase from 43 households aged 65 and older for every 100 working-age households in 2020 to 56 households aged 65 and older in 2035. 

As working age households are major drivers of tax base, the change in ratio creates fiscal pressure. The reason being there will be fewer taxpaying households age 20-64 to support an elderly population that is projected to grow from 2.49 million in 2020 to 3.04 million in 2035. 

“There is a growing share of older people, older households in the Commonwealth, but the tax base that’s supporting a lot of the programs that support the elderly has not grown as quickly,” Scott said. “So that’s going to be placing more stress on taxpayers in Pennsylvania.” 

How much stress was revealed by Garrity, who noted that two million Pennsylvanians, approximately 44% of the state’s private-sector workforce, cannot save for retirement at work. The resultant cost to taxpayers, she said, is more than $1 billion annually. 

“I really want to emphasize this point,” Garrity said. “Pennsylvania taxpayers are footing a bill of more than $1 billion per year to account for unprepared retirees. That includes costs for social services and lost revenue.” 

Garrity added that research conducted by the Independent Fiscal Office confirms that Pennsylvania will reach a fiscal cliff by Fiscal Year 2025-26. 

“Common sense says we should prepare for it now,” said Garrity. “And here’s another fiscal challenge for Pennsylvania: The research we’re discussing shows the retirement savings crisis will cost Pennsylvania a total of $17.8 billion through 2035. So that’s the scope of the problem.” 

The problem having been defined, what’s the solution? Garrity and Scott said one way to address the retirement savings crisis is to implement a simple, business-friendly plan to help working Pennsylvanians save for retirement. Not a government handout, Garrity emphasized, but a program that makes it easy for people to save for retirement. 

“The goal,” she said, “is to make it easy for people to save their own money.” 

In December 2021, Garrity and Rep. Tracy Pennycuick (R-Berks/Montgomery) and then-Rep. Michael Driscoll (D-Philadelphia) announced the introduction of “Keystone Saves”, a retirement-savings program for Pennsylvanians who do not have access to retirement savings through their employer. 

As is the case with automated savings programs across the country, Keystone Saves would enroll employees automatically in a voluntary individual savings account (IRA) to which they can use direct deposit to make regular contributions. 

Estimated to help Pennsylvania reduce state spending by close to $1 billion annually, Keystone Saves is supported by The Pew Charitable Trusts, the Pennsylvania Institute of CPAs, the American Association of Retired Persons (AARP), the United Way of Pennsylvania, the Pennsylvania Health Care Association, the Pennsylvania Association of Sustainable Agriculture, and members of the state’s General Assembly. 

As many employers are unable to provide retirement savings due to administrative capacity and high startup costs, state automated savings programs are seen as a practical solution to provide savings opportunities to workers who lack them. 

Scott noted that 12 states in the U.S. have enacted legislation creating such programs, and programs in six states are operational. Participants in state-sponsored automated savings programs have an average annual savings of $1,500 to $2,000. 

“These programs are showing this can be done,” said Scott. “This is a very feasible and practical solution.” 

The Keystone Saves bill has received bipartisan support in the Pennsylvanian legislature but has yet to pass. As Gov. Josh Shapiro is a Democrat who stresses bipartisanship, the opportunity exists to work with Garrity, a Republican, to guide the bill through the legislature. 

“The time to solve this problem,” Garrity stated, “is now.”

History made as Shapiro, Davis sworn-in as Pa.’s new leaders

Invoking the history of Pennsylvania, its founder William Penn, and various chapters of its storied past and present, Democrat Josh Shapiro was inaugurated Tuesday as the state’s 48th Governor. 

Amid cold, overcast surroundings, the 49-year-old former attorney general placed his hand on three Jewish Bibles and took the oath of office from Chief Justice Debra Todd. 

The three Bibles are of special significance to Shapiro, who is Pennsylvania’s third Jewish governor. One was a family bible; one was from Pittsburgh’s Tree of Life Synagogue, where 11 worshippers, including several Holocaust survivors, were killed in 2018 by a gunman in the deadliest antisemitic attack on U.S. soil; and one was U.S. Army-issued and brought into battle on D-Day, June 6, 1944, by Philadelphia’s Herman Hershman, a Purple Heart recipient. 

“Along the winding road that led to this moment,” Shapiro began, “I’ve been grounded in my faith and family.” 

Shapiro’s swearing-in ceremony on the steps of the state Capitol was one of two historic ceremonies taking place Tuesday in Harrisburg. Austin Davis was sworn in the state’s Senate chamber as Pennsylvania’s first Black lieutenant governor, and at age 33, is the country’s youngest lieutenant governor. 

Davis said his swearing-in sends a message to young people in Pennsylvania, particularly young people of color, that the Keystone State is a place where everyone is welcomed and can succeed. 

“I say to all the young people watching right now, who are worried and unsure about their future – that the American Dream is alive and well in Pennsylvania,” Davis said. “That no matter how you grew up, no matter where you come from, or what you look like – this Commonwealth will always be a place where you can create your own destiny.” 

Shapiro spoke of destiny as well. Acknowledging that he is “entrusted with this awesome responsibility,” he said he realizes “it is just for a moment in the long history of our Commonwealth” and that he is the “next link in the chain of progress.” 

Noting the presence of former Pennsylvania Governors Tom Wolf, Tom Ridge, Mark Schweiker, and Tom Corbett, Shapiro thanked his predecessors, particularly his immediate predecessor, Wolf. 

“Thanks to his leadership,” Shapiro said, “we now find ourselves in the strongest financial shape in the history of the Commonwealth of Pennsylvania, allowing us to make critical investments for tomorrow.” 

Shapiro emphasized that the presence of the former governor’s “formally celebrates the peaceful transfer of power.” 

His statement was one of several pointed references he made to political extremism and the Jan. 6 insurrection. 

“Here in Pennsylvania, we didn’t allow the extremists who peddle lies drown out the truth,” he said. “We showed that our system works and that our elections are free and fair, safe and secure.” 

Shapiro’s speech lasted approximately 45 minutes and covered a wide range of subjects, including abortion, diversity, education, environment, extremism, faith, family, gun violence, public safety, and religion. Staying away from specificity, Shapiro spoke largely in broad terms. His speech was aimed at unifying a Pennsylvania government divided and attempted to resonate not only with his supporters but also with those whose votes he failed to get. 

Having the reputation as a consensus builder, Shapiro is expected to put together one of the most diverse cabinets in Pennsylvania history. Despite the divided government in Harrisburg, Democrat and Republican leaders have spoken of having common ground when it comes to investing in education, investing in workforce development, and economic development. 

“I set out to build a Cabinet and senior team that looks like Pennsylvania,” Shapiro said, “and reflects the people and the communities that I just took an oath to serve and protect.” 

Shapiro’s inaugural speech often had the tone of the type of rallying cry heard on campaign trails. It also mirrored in some respects the lyrical oratory of former Democratic presidents Bill Clinton and Barack Obama. Shapiro is seen by many as a possible presidential prospect. 

Shapiro concluded his address by stating, “And so, with my faith firmly rooted in we the people of Pennsylvania, with my heart open to others and my eyes fixed ahead, I am prepared to do my part to move our Commonwealth forward.” 

Congratulations on Shapiro’s swearing-in came from several fronts. Republican Leader Bryan Cutler (R-Lancaster) said in a statement that as a candidate, Shapiro “offered many policy proposals that provided a path to bipartisan accomplishment and real progress for shared goals. As we look ahead, it is our hope that Gov. Shapiro governs under that same spirit and with a true willingness to find common ground.” 

Bill Johnston-Walsh, state president of AARP Pennsylvania, also congratulated Shapiro and Davis. He added that AARP Pennsylvania applauds the commitment to public service shown by Shapiro and Davis and the message of inclusivity that’s been the essence of the Shapiro-Davis Transition Team, aligning as it does with AARP’s mission to lead positive social change and to find ways to improve the lives of Pennsylvania’s 50 and older population. 

“Recognizing that every Pennsylvanian deserves access to quality, affordable health care and home and community based-services when needed,” Johnston-Walsh said, “we look forward to working with the Shapiro Administration and the General Assembly to promote policies that guarantee residents throughout the Commonwealth can live and age healthy and well with the dignity and respect they deserve.” 

National Federation of Independent Business (NFIB) State Director Greg Moreland urged the Shapiro-Davis Administration and legislators to keep small businesses’ interests in mind. 

“Small business is the backbone of Pennsylvania’s economy, anchoring Main Streets across the state and creating a majority of all net new jobs,” Moreland said. “There is much work to be done to ensure small businesses in Pennsylvania can thrive. 

“NFIB stands ready to work with Governor Josh Shapiro, his cabinet members, and the Senate and House to adopt policies that help improve the business environment for small businesses in Pennsylvania.”