Out and About (Sort of): The Quiet Retirement Crisis by Howard Freedlander


“Retirement Security of All Marylanders” sounds like another expensive government program, doesn’t it?

That’s what I thought when I was appointed in July 2014 to a governor’s task force to study how and whether to provide retirement income to all non-public service employees in Maryland. I’ve since learned that my initial impression was misguided.

Simply, most Marylanders and Americans are ill-prepared for retirement, with little money saved for a lengthy life as a retiree. More than a million Marylanders working in private business across the state have no retirement plans. Many have saved little or nothing, depending solely on Social Security.

Most smaller businesses offer no retirement plans. Even when available, many employees don’t take advantage. Though individual savings plans (IRAs) are available, most people don’t understand them, and typically few people without an employer-based plan uses IRAs.

The data in the previous two paragraphs surfaced in documents available to the task force, often presented at several meetings, hearings and discussions.

A friend in Talbot County well-versed in the investment and mutual fund world considers the lack of retirement security to be a national crisis. Another friend who spent his career in the mutual fund field and pension analysis agreed with this characterization.

Short of getting too immersed in details, the task force recommended that every citizen of Maryland should have access to a payroll deduction retirement savings plan without burdensome paperwork or complicated decision-making. Employers would do nothing but provide an automatic payroll deduction through their current payroll processes.

Employers may contribute to employees’ plans but have no obligation to do so. Employers would assume no major financial or administrative burdens.

Investments would be low-cost, provide good value and be professionally managed (preferably in my opinion by private firms).

I began being skeptical and gradually became a believer as I listened at hearings from small business owners who wanted to encourage their employees to save for retirement, but had no vehicle to do so.

I became concerned that should states or the federal government do nothing to address this “quiet crisis,” the burden particularly on the federal government would be huge. People are living longer, as we know, in some cases outliving their retirements. Those depending solely on Social Security will find it impossible to survive without help.

This subject requires a more thorough examination. Unless extended, the task force comes to an end on February 15. I hope it continues…

Letters to Editor

  1. Al Townshend says

    Sounds like social security and we all know how that worked out…

    • Norman Dulak says

      There indeed is an approaching retirement crisis in this country. I applaud any reasonable effort to address this problem. Making snide remarks about a program that has supported so many Americans in retirement is not helpful.

  2. Bill Anderson says

    I don’t know why a private employer feels as though it has no vehicle for making an employee-invested retirement plan work. For example, my employer years ago provided a program through the Vanguard Group, a financial company with low cost transactions. There were almost innumerable mutual funds into which each employee could xhoose to invest his payroll deduction as each determined to be their preference. At times, the employer would make contributions also into the employee’s plans. The invested funds always were the employee’s property and he could invest additional funds or withdraw a portion or all of it at will. To the best of my knowledge the employer had no real expense other than voluntarily adding to employees accounts.

    • Melinda Bookwalter says

      Totally agree.
      Also, as opposed to “professionally managed”, save the expense of professional management which has been shown to be quite costly to the individual over time (I worked for the State and saw the fees for “management” and the poor choices available). Index funds can help take the worry out of choice and further keep costs down for the individual.

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