Senate supports Sen. Vitelli bill to help more working Mainers save for retirement

AUGUSTA — On Tuesday, the Maine Senate voted in favor of a bill from Sen. Eloise Vitelli, D-Arrowsic, to help more Maine workers save for retirement. LD 1622, “An Act To Promote Individual Retirement Savings through a Public-Private Partnership,” received bipartisan, unanimous support in an initial vote.

“Studies show the best way to help people build their own retirement savings is to give them the opportunity to save through their employers. However, these plans can be costly and complicated to implement for Maine’s small businesses. As a result, one out of every three Mainers over 65 relies only on Social Security for their income, but with an average monthly benefit of just $1,100, this isn’t enough to get by,” said Sen. Vitelli. “LD 1622, the Work and Save bill, presents a solution to help working Mainers put aside their own money for their retirement. I’m grateful for all the effort that went into making this bill as strong as it is, and to my colleagues in the Senate for supporting its passage.”

As amended, LD 1622, the Work and Save bill, would create the Maine Retirement Savings Program, a way for working Mainers to contribute to a Roth IRA directly from their paycheck. Employers who don’t offer their own retirement savings plans will facilitate a deduction for their employees, straight from their paycheck. These employers do not contribute any matching funds to the plan. The deducted funds go into a Roth IRA, following participants from job to job until that person is ready to retire. At least six other states have similar programs.

According to data from AARP, approximately 46 percent of private-sector workers in Maine — about 235,000 people — do not have access to an employer-sponsored retirement savings program. Nationally, 26 percent of working-age adults say they have no retirement savings at all.

A 2017 report published by the Margaret Chase Smith Policy Center at the University of Maine states that, “Inadequate savings for retirement creates fiscal costs due to increased elderly reliance on public assistance … Simulations show that increasing retirement income through greater preretirement savings can substantially reduce the need for taxpayer contributions for public assistance.”

“In 2020, 34 percent of our tax filers indicated that saving for retirement is one of their top three financial goals and 32 percent identified that saving for retirement is a challenge. Many of these tax filers work for employers that do not offer a retirement savings program. These individuals are also balancing other financial demands, like saving for unexpected expenses and other goals, and would benefit from a retirement savings program that would make it easier for them to save, like the plans offered by many large employers,” said Janet Smith, with CA$H Maine, in testimony supporting the bill.

“More than a third of Mainers who are over 65 live on Social Security benefits alone, without any retirement savings. The average annual Social Security income for these Mainers is $18,000. This is just about 140 percent of the Federal Poverty Level and is not enough income for these people to meet their basic need,” said Torey Steward with the Maine Council on Aging, in testimony supporting the bill. “While many of these people will need to make significant repairs to their homes and pay out of pocket for health care and home care, they will not be able to afford these expenses.”

LD 1622 is also supported by the Maine State Treasurer, Maine State Attorney General, AARP Maine, Maine Women’s Lobby, Maine Association of Retirees, and Disability Rights Maine.

LD 1622 faces further votes in the Legislature.