Posts Tagged "New Jersey"

State Auto-IRAs are Building Momentum

About half of the nation’s private-sector employees do not have a retirement savings plan at work, and that hasn’t changed in at least 40 years.

Some states are trying to fix this coverage gap in the absence of substantial progress by the federal government in solving the problem.  And the state reforms are gaining momentum.

Auto-IRA mapIn the past year alone, Maine, Virginia, and Colorado have passed bills requiring private employers without a retirement plan to automatically enroll their workers in IRAs, with workers allowed to opt out. New York City, which is more populous than most states, approved its program in May. And other states are either starting to implement programs or looking at their options.

Auto-IRAs are already up and running in California, Illinois, and Oregon, where a total of nearly 360,000 workers have saved more than $270 million so far. The programs are run by a private sector administrator and investment manager.

These mandatory programs are the only practical way to close the coverage gap, because voluntary retirement saving initiatives have never done the trick. Numerous voluntary plans created by the federal government – such as the Simplified Employee Pension (SEP) – have failed to measurably increase coverage.

Large corporations usually offer a 401(k) plan and match some of their workers’ savings. But millions of restaurants, shops, and other small businesses either can’t afford to set up their own 401(k)s or don’t see it as a priority. Without additional saving, half of U.S. workers are at risk of a drop in their standard of living when they retire.

State auto-IRA programs eliminate the administrative burden and expense to employers of a private plan and provide an easy way for workers to save. The money is taken out of their paychecks before they can spend it and is deposited in an account that grows over time. The state programs also permit workers  to withdraw their contributions without a tax penalty for emergencies, like a medical problem or broken-down car, if they need the money they’ve saved. …Learn More

Federal Minimum Wage is 40% Below 1968

minimum wage figureLargely missing from the debate about raising the federal minimum wage is how much its value has eroded over the past 50 years.

The current federal minimum is $7.25 an hour. If the 1968 wage were converted to today’s dollars, it would be worth about $12 an hour.

At $7.25 an hour, a full-time worker earns just over $15,000 a year before taxes, which is less than the federal poverty standard for a family of two. The Biden administration has proposed more than doubling the federal minimum to $15 by 2025, and one proposal in Congress would begin indexing the minimum wage to general wages so it keeps up with inflation.

A $15 an hour minimum isn’t enough, said one sympathetic Florida contractor who voted in November to gradually increase the state’s mandatory minimum wage to $15. “I’d like to see some of the American people go out there and try to make a living and put a roof over their head and raise a family,” he told a reporter. “It’s literally impossible.”

Customer receiving from McDonald's drive thru serviceBut small businesses say raising the minimum wage would increase their financial pressures at the worst time – during a pandemic. At least 100,000 U.S. small businesses closed last year as governments restricted public gatherings to suppress the virus, and the Congressional Budget Office (CBO) estimates a higher federal minimum could eliminate 1.4 million jobs.

This evidence ignores the complexity of low-wage workers’ situations. Employee turnover is extremely common in low-wage jobs in fast food establishments, for example, and workers frequently have bouts of unemployment that further reduce their already low earning power. Raising the minimum wage could somewhat compensate for their spotty employment and provide more money for essential items. And while the CBO warns of job losses, it also predicts that a higher federal minimum wage would lift 900,000 million workers out of poverty.

Many states have approved incremental automatic annual increases, and a $15 minimum wage has been approved in eight states, including Florida. Voters – over the objections of the Florida Chamber of Commerce – approved raising the state’s minimum wage from $8.65 this year to $15 in 2026.

“We won’t get fifteen for another five years. We need that now,” an Orlando McDonald’s worker, Cristian Cardona, told The New Yorker.

Once again, inflation is a problem. “By the time we get fifteen, it’s going to be even less,” he said. …Learn More

Diverse Population Uses Nursing Homes Less

Son with father in wheel chair

Since the 1980s, the share of the U.S. population over 65 has grown steadily. At the same time, the share of low-income older people living in nursing homes has declined sharply.

New research by the University of Wisconsin’s Mary Hamman finds that this trend is, to some extent, being driven by an increasingly diverse population of Hispanic, Black, Asian, and Native Americans. They are more likely to live with an adult child or other caregiver than non-Hispanic whites, due, in some cases, to cultural preferences for multigenerational households.

Nursing home residence is also declining among older white Americans. However, in contrast to the Black population, whites are increasingly moving into assisted living facilities. This creates what Hamman calls a “potentially troubling pattern” of differences in living arrangements that might reflect disparities in access to assisted living care or perhaps discriminatory practices. Notably, the researcher finds that the Black-white gap in assisted living use persists even when she limits her analysis to higher-income adults.

Eight states have seen the biggest drops in nursing home use: Florida, Georgia, Louisiana, New Jersey, New Mexico, North Carolina, South Carolina, and Tennessee. Many of these states have experienced fast growth in their minority populations or have more generous state allocations of Medicaid funds for long-term care services delivered in the home.

Growing diversity is actually the second-biggest reason for lower nursing home residence, accounting for one-fifth of the decline, according to the study, which was funded by the U.S. Social Security Administration and is based on U.S. Census data.

As one might expect, the lion’s share of the decline – about two-thirds – is due to policy, specifically changes to Medicaid designed to encourage the home care that surveys show the elderly usually prefer. …Learn More

Map of the United States

Where Will You Retire? This Might Help

The toughest part of Paul and Cathy Brustowicz’s decision to relocate from New Jersey to Summerville, South Carolina, was leaving behind their two grandchildren. The retirees also miss the theater and dinners in Manhattan.

A big advantage of South Carolina, though, is “more house for the money,” Paul Brustowicz said. The couple also had a few old friends who were already living there, and the warm weather is nice, though it, too, involves a tradeoff: high summer humidity and hurricane season. As for amenities, it’s a quick drive to Charleston for dinner, the airport, and the Medical University of South Carolina.

“Overall, it was the right move for us,” he said about the 2012 relocation.

South Carolina ranked a very respectable 14th in WalletHub’s 2021 report on the best and worst states to retire. New Jersey, on the other hand, is squarely in last place because of its steep cost of living.

Also at the bottom of the ranking are New York – another very high-cost state – and Mississippi, which is ranked as having a subpar health care system.

Wallet Hub’s 50-state rankings are based on three categories: affordability, quality of life, and health care. A chart displays each state’s ranking overall and in each category.

Florida, with its year-round sun, golf, and very large retiree community, came out on top. Housing is a relative bargain there, and taxes are low. The tradeoff is the state’s mediocre health care system.

After Florida comes Colorado, which gets high marks all around, and Delaware, which is an affordable retirement spot. …Learn More