Research Professor Trostel Examines Fiscal Impact of Too Little Saving for Retirement
Margaret Chase Smith Policy Center and School of Economics Professor Phil Trostel has received funding from AARP for new research on “The Fiscal Implications of Inadequate Saving for Retirement”.
Most workers do not save enough for retirement. According to AARP Maine, one-third of Mainers 65+ rely entirely on Social Security, an average annual income of $14,000, and the typical working household in Maine has only $3,000 saved for retirement.
Saving even the smallest amount today will improve financial security in retirement.
The lack of personal saving for retirement means many of the costs of retirement for are covered through government spending, by transfer payments such as Medicaid, Supplemental Nutrition Assistance Program, various types of cash assistance, energy assistance, housing subsidies, and Supplemental Security Income.
A new study by Professor Phil Trostel will look at the fiscal costs (costs to federal/state/local governments) of “new retirees” (people turning 65 in coming years) by calculating transfer payments (cash and in-kind) to this population. Trostel’s research will then estimate the difference between fiscal costs and retirement income. After determining this current fiscal cost, Trostel will examine how future retirees differ from current retirees in their retirement income, and then estimate the projected cost to government from new retirees.
The final step in the study will be to estimate the fiscal savings to the federal and state government if new retirees had saved more for retirement. Results emphasized in the report will be for Maine and the United States, and projections will be for the 15 years from 2018 through 2032.