OPINION: Being prepared for retirement in Alaska

AARP’s mission is to empower people to choose how they live as they age. The more money you have for retirement, the more choices you have as you age.

Protecting Social Security and working for bipartisan legislation to keep Social Security solvent for the long term is a top priority for AARP. However, we know that Social Security is just one piece of retirement readiness, and not enough to rely on. And according to the Federal Reserve’s 2022 “Economic Well-Being of Households Survey,” only 31% of non-retirees thought their retirement savings was on track, down from 40% in 2021.

That’s why we are also advocating for state-level changes that would help Alaskans of all ages build a foundation for a more secure retirement, where they are able to choose how they want to live as they age. Sens. Cathy Giessel and Bill Wielechowski recently joined AARP members in a statewide telephone town hall to talk about legislation they each have introduced to help Alaska workers become retirement-ready.

Wielechowski spoke about his Alaska Work and Save Program bill (SB135), which establishes an auto-IRA program for all Alaska employees who lack access to a workplace retirement savings plan and creates an option to allow PFD checks to be saved directly into those retirement savings accounts. Alaska Work & Save would be state-facilitated and privately managed for Alaskan workers’ retirement savings similar to 529 college savings plans.

Wielechowski cited a recent AARP survey of small businesses in Alaska. Data shows that 64% of respondents don’t offer a workplace retirement option, with cost identified as the biggest barrier. “It’s a fairly complex, time-consuming, expensive system that could cost small businesses thousands if not tens of thousands of dollars,” said Sen. Wielechowski.

But that doesn’t mean that businesses don’t prioritize their employees’ retirement savings: more than two-thirds support a privately managed, ready-to-go retirement savings option that would help small businesses offer employees a way to save for retirement.

“We are on the verge of a retirement catastrophe because we will have generations of people retiring that have very little or no savings at all,” said Sen. Wielechowski. “Fifty-four percent of households have no retirement savings, and the median retirement savings for ages 65-74 is $200,000.”

“Sixteen states have done this already and it’s been very successful, and many other states are proposing similar type legislation,” said Sen. Wielechowski. “Ultimately the plan will have no cost to the state. We think this is a reasonable, fiscally conservative way to encourage small businesses to provide retirement and will also encourage employees to save up.”

Moving to the public sector, Giessel discussed her pensions for public service bill, SB88 — Retirement System Defined-Benefit Option, which would establish a new modest defined-benefit pension for state and local public workers. “Alaska has the worst retirement system in the country for our public employees. We are the only state that doesn’t have some form of defined benefit for at least one group of public employees,” said Giessel.

The plan would address Alaska’s 17% average vacancy rate for public employees, including snowplow operators, teachers, and firefighters. “We are losing our firefighters and our police officers to the Lower 48. After five years of service with the current defined contribution plan, they are vested and they are leaving the state,” noted Giessel. She also observed that because teachers in Alaska do not receive Social Security, they “have no retirement safety net at all.”

Giessel cited recent public polling results with an average 68% of the population across political parties, and in every region of the state supporting a modest pension for public employees.

Both senators emphasized the past 11 straight years of working-age Alaskan outmigration. They highlighted the impact of retirement benefits on economic vitality and the decision to leave the state.

Retirement readiness is good for Alaska and good for Alaskans. With robust savings and retirement options in both the public and private sectors, we can have a thriving small business climate and maintain the public programs and services to keep generations of Alaskans in the last frontier. AARP supports both Alaska Work and Save (SB 135) and pensions for public employees (SB 88).

A full recording of the conversation is posted on AARP Alaska’s Facebook page.

Marge Stoneking has served as Advocacy Director at AARP Alaska since 2020.

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