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Saving Maryland's retirees

Does your employer offer a pension, 401(k) or other retirement savings vehicle? If the answer is yes, good for you, as such investments are critical to anyone seeking to confine the dog food eating in the twilight years strictly to the canine members of the household. Unfortunately, nearly half of the workforce goes without, and that's a growing problem.

Conventional wisdom couches retirement finances as a three-legged stool of Social Security, pension and savings. The first of those legs may be looking a little shaky, but the other two are back-breakingly pathetic. Americans are saving insufficiently for the golden years — a recent Government Accountability Office report estimates that nearly one-third of Americans have neither a pension nor retirement savings of any kind — but many lack even the option of an employer-based tax-free savings program.

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Anyone can open up an Individual Retirement Account, of course, but that's a bit like saying anyone can quit smoking or lose weight: In reality, people need all the help they can get, and an employer-based plan with automatic payroll deductions (and particularly when there's an employer match) is far more likely to succeed. This enormous shortfall of retirement savings raises serious questions about the quality of life facing the nation's seniors and the consequences of such financial insecurity on everyone else.

That's why the recent announcement that Maryland's legislative leaders have appointed a task force to find ways to address this shortfall should be regarded as welcome news. It also represents a resurrection of sorts: Gov. Martin O'Malley appointed a similar panel last year, but it was allowed to expire by Maryland's incoming governor.

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Unfortunately, it appears Gov. Larry Hogan's disinterest in the topic is unchanged in eight months time, his spokesman having told The Sun's Michael Dresser that whatever the task force recommends will be a "hard sell" in the governor's office. Given that the task force hasn't even had its first meeting yet, that's a level of closed-mindedness unbecoming of a pragmatic governor.

What Mr. Hogan and his advisers should be saying is that he, too, is concerned about the potential burden facing the next generation of Maryland taxpayers if this situation is allowed to continue and that he is open to exploring ways to encourage retirement savings. Across the country, states are doing just that, with some setting up privately-managed savings plans — not unlike Maryland's highly successful 529 college savings accounts — to make it easier for all involved.

Granted, a certain amount of wariness is understandable. But this is not an issue that inflames the business community. In other states, employers, both large and small, have supported state-sponsored retirement plans.

One good example is in Illinois where a retirement savings program was signed into law in January. It requires companies with at least 25 employees to automatically deduct 3 percent of a worker's paycheck into a low-cost retirement savings plan. Workers can opt out of the program, and the only cost to employers is to do the paperwork, something they already manage for taxes and other payroll obligations. Employers aren't required to make a contribution of any kind.

That doesn't seem to be asking for much, yet the rewards can be considerable. A 2014 study often cited by the AARP found that about 62 percent of employees with access to a retirement plan had more than $25,000 in savings and investments, but only 6 percent of those without access to such a plan had more than $25,000 saved. That's the difference a payroll deduction can make.

Here's one last point Mr. Hogan should consider: Democrats in the General Assembly aren't pursuing this for the second time because it's likely to be unpopular with voters. Quite the contrary. They are secretly hoping Governor Hogan continues his opposition to it — much as they were pleased when the last Republican governor vetoed a cap on college tuition. Like rising tuition costs, this gap in retirement benefits is an issue not just for the poor but for middle class and more affluent families as well. There are at least a million Marylanders without access to an retirement savings plan through their jobs right now, and that adds up to a lot of potential voters in 2018.

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