Retirement Security in Philadelphia

Why is the Controller’s Office interested in retirement security?

The US retirement security system has changed profoundly in recent decades. Broad national trends such as the rise of defined contribution retirement plans and the decline of defined benefit pensions, gains in life expectancy, and the surge of nontraditional work arrangements have shifted much of the responsibility for retirement planning and savings to the individual. In this altered context, many Americans struggle to save enough for retirement. The negative consequences of inadequate retirement savings will be most severe at the local level. Rising numbers of poor seniors will result in increased demand for public assistance programs and reduced spending in the local economy. In sum, insufficient retirement assets of Philadelphians pose a risk to the fiscal and economic health of the City of Philadelphia.


This report is intended to serve as the basis for a broader and deeper policy discussion and as a framework to guide City policy makers, and as such does not offer definitive solutions. Nevertheless, it does present the following findings:

●    Philadelphians - as Americans elsewhere - do not save enough for retirement. The average working household in the United States has virtually no retirement savings. Women, minorities and low-income workers face the largest barriers to building financial security for old age. 
●    Accumulating sufficient retirement savings depends strongly on having a retirement plan at work. About fifty-four percent of employees in Philadelphia (334,000) do not have access to a retirement plan at work. Small businesses are least likely to offer retirement plans to their employees. 
●    Currently, one third of Philadelphia's seniors have incomes below 150 percent of the federal poverty level and 21 percent are in the Supplemental Nutritional Assistance Program. 
●    More than half of Philadelphia’s senior households are forced to make difficult choices between their basic needs such as food, medicine, heating or cooling. 
●    A senior in Philadelphia currently needs $423 per year, on average, to cover out of-pocket medical expenses. Millennials will face about four times higher expenses for health care in their senior years than current retirees. 
●    If nothing is done to stop the erosion of retirement security in Philadelphia, the economic and social costs associated with rising numbers of poor seniors in the city may undermine Philadelphia’s fragile economic revival. 
●    Given the inaction of the federal government, more than 20 states around the country - not including Pennsylvania - have stepped in and introduced policies to foster retirement readiness among their residents. Namely, states are pursuing state-run Auto-IRAs (aka “Secure Choice”), Open Multiple Employer Plans (Open MEP), Prototype Plans and Retirement Marketplaces. 
●    Some large cities, including New York City and Seattle, have expressed interest in exploring city-run Auto-IRA programs.

●    The City should hold hearings to supplement the findings in this report and allow policymakers the opportunity to engage with both experts and ordinary citizens about retirement security issues.
●    The City should form a Retirement Security Working Group. The RSWG will be charged with synthesizing the testimony collected during hearings and collecting additional information from experts and citizens in order to produce a set of recommendations for further action. 

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