Californians appear to be lagging behind other Americans in being financially prepared for retirement, two new reports indicate.
The studies by the Pew Charitable Trusts and Bankrate, a website devoted to personal finance, bolster efforts by Senate President Pro Tem Kevin de León and others to create a new, state-sponsored pension plan for non-government workers.
Four years ago, de León carried legislation authorizing a “Secure Choice” retirement plan, similar to those being proposed in other states. Still being written by a commission, the plan would, unless they opt out, require workers to pay into tax-sheltered retirement plans.
Pew studied access to employer-sponsored retirement plans, both traditional “defined-benefit” pensions and “defined-contribution” programs such as 401k accounts, in 104 metropolitan areas, and reported that residents of California regions rate among the lowest.
Nationally, Pew’s census-based study found, fewer than 60 percent of workers have access to retirement plans and fewer than 50 percent participate in such plans.
Access ranges from a high of 71 percent in the Grand Rapids, MI, metropolitan area to 23 percent in the McAllen, TX, area.
Within California, the San Jose area rates the highest at just over 60 percent, but it and Modesto are the only California communities in the above-average group. All other California areas fall below the 50th percentile, ranging downward to the Los Angeles metropolitan area, whose residents have the nation’s 6th lowest access to retirement plans, barely 40 percent.
Bankrate’s study approached retirement preparedness by a different route, calculating, state-by-state, median incomes of residents 65 years and older against the widely accepted standard of having 70 percent of pre-retirement incomes.
By that standard, California fell roughly in the middle of the states. Its post-65 residents have median incomes ($45,732) that are 61.74 percent of those in the immediate pre-retirement cohort, 45 to 64 years old ($74,074). The national median is 60.27 percent.
California isn’t alone in falling short of the 70 percent standard. Post-65 residents of just three states – Hawaii, Alaska and South Carolina – meet that level, while Massachusetts comes in last at just 48.22 percent.