Aging PA Population Will Need $17.8 Billion Through 2035 For Retirement: Study

PENNSYLVANIA — As a massive generation of Pennsylvanians move closer to retirement, analysts are warning that they will not have sufficient retirement savings to maintain their quality of life without enormous support from taxpayers. Companies must take responsibility by offering better retirement savings plans, lawmakers and advocates urge.

A new study from Pew Research indicates that the number of "financially vulnerable" Pennsylvanians over 65, quantified as those who make less than $75,000 per year, will increase by 17 percent from 2020 to 2035.

It'll cost Pennsylvania taxpayers an estimated $17.8 billion in that time span, Pew says.

"As these workers age, inadequate retirement savings will likely force reductions in retirement income and hence in the quality of life for many," the study notes. "At the same time, this shortfall in retirement income will increase state spending for Medicaid and other assistance programs."

Retirement has never been more expensive, and even for those who have planned carefully and saved large amounts, inflation and other financial pressures are creating significant stressors.

"Instead of enjoying their senior years, too many of our retirees find themselves straining to match insufficient savings with the costs of living and unforeseen expenses," State Reps. Tracy Pennycuick and Michael J. Driscoll wrote in a co-sponsorship memorandum for forthcoming legislation that would address the issue.

Pew also says they expect the "age dependency ratio," or the ratio of those over 65 to those of working age, to skyrocket by 29 percent by 2035. This "means that there will be fewer workers to support a burgeoning elderly population," the study adds.

Pew argues that more companies need to offer employer-sponsored retirement savings plans. In leiu of that, some lawmakers and advocates are backing proposed legislation, called the Keystone Saves Act, which would automatically create an individual retirement accounts for workers at no cost to employers.

"Keystone Saves is designed to maximize employee choice and control while minimizing any burden on employers," Pennycuick and Driscoll wrote. "In our proposal, employees can set their own contribution levels, increase or decrease their deductions, make investment choices, leave the program at any time, or even opt out altogether."

Twelve other states have already adopted similar programs. The bill has not yet been introduced this session, but will be in the near future, lawmakers said.

Pennsylvania is below average when it comes to how long retirement savings last. A study from GoBankingRates found that $1 million in retirement savings would go farther in 26 other states than it would in Pennsylvania.

Pennsylania's middling ranking comes despite a U.S. News ranking that placed it, curiously, as a top retirement haven. Lancaster and Harrisburg took the top two spots in the nation. York was 5th, Allentown was 9th, and Reading was 10th. Several other Pennsylvania towns made the top 25, including Scranton (17), Philadelphia (19), and Pittsburgh (20). A separate ranking noted Pennsylvania among leaders for stopping elder abuse.