State-run retirement plans that provide coverage for private-sector employees whose employers do not are intended to help those employees to set the foundation for a more financially secure retirement. But they also can help with bigger-picture concerns, suggests an industry expert.
Important in Good Times and Bad
We are facing many economic challenges, but Ubiquity Retirement + Savings Founder and CEO Chad Parks in a recent interview with ASPPA Connect/ NTSA Advisor argues that saving for retirement is important regardless of boom and bust cycles.
“In good and bad economic times, the reality remains that contributing to a retirement fund is necessary, making payroll deduction one of the biggest advantages of saving through an employer,” says Parks. “The actual retirement account does not matter nearly as much as the behavior of moving the money into an account, irrespective of macro-economic conditions. Knowing this information, the national economy should not factor into a state’s decision making process for state-run retirement plans,” he continues.
There will always be external challenges to saving and investing for individual savers, says Parks. “While individuals may not be great at navigating difficult situations, a long-term retirement plan that remains in place throughout unsteady times is a stronger strategy than a short-term savings plan constantly in flux with the national economy,” he argues.
Social Issues Too
Parks also suggests that increasing retirement plan coverage can address other issues as well.
Before the pandemic, he says, 80 million individuals did not have access to a retirement savings option, and 43% of employers did not offer one. “At the state level, it’s being realized that this is an issue to get in front of, as such an ill-prepared workforce can lead to exacerbated social issues,” he argues.
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