Retirement Savings Gaps May Increase Burden on Pennsylvania Taxpayers

Data shows saving as little as $25 a week can ensure retirement security

Data Visualization October 22, 2020 Read time:

Projects: Retirement Savings

Overview

Workers in the United States accumulate the vast majority of their retirement savings through employer-based plans, but large gaps in coverage exist. Pennsylvania is no exception, with about 1 in 3 workers lacking access to a workplace plan.

As in the rest of the country, Pennsylvania’s vulnerable older households—people aged 65 and older with less than $75,000 in annual income—are expected to increase by 27% from 2015 to 2030. As Pennsylvania workers age, inadequate retirement savings not only will force a reduction in the quality of life for many of them entering their golden years but will also put pressure on public spending and increase taxpayer burdens. According to The Pew Charitable Trusts in consultation with Econsult Solutions Inc., from a 2015 baseline through 2030, Pennsylvania can expect to see an additional $14.3 billion in state spending, such as from Medicaid,¹ due to insufficient savings.² This obligation will be borne by an ever-smaller share of the overall population. The aged dependency ratio—the ratio of those households 65 and older to those of working age—is expected to grow by nearly 50%, further stretching the tax base. In 2015, there were 38 households aged 65 and over for every 100 households aged 20-64. In 2030, that number will grow to 57 households aged 65 and over for every 100 working-age households.

Fortunately, even small savings now could offset the shortfall. The study finds that if households saved just $1,170³ a year—or about $98 a month—over this 15-year period, they could completely erase the retirement savings gap and allow for a retirement without lifestyle changes driven by inadequate savings.

Select which measure to visualize on the map:

Taxpayer burden

Dependency ratio increase

Additional savings required

Cumulative additional taxpayer liability due to insufficient savings, 2015–30

Erie

Susquehanna

Warren

McKean

Bradford

Tioga

Potter

Crawford

Wayne

Wyoming

Forest

Lack-

awan-

Sullivan

Cameron

Elk

Venango

Pike

Lycoming

Mercer

Clinton

Clarion

Luzerne

Jefferson

Monroe

Columbia

Law-

rence

Mon-

tour

Clearfield

Union

Carbon

Butler

Centre

North-

umber-

land

Armstrong

North-

ampton

Snyder

Beaver

Schuylkill

Indiana

Lehigh

Mifflin

Juniata

Allegheny

Cambria

Blair

Berks

Dauphin

Huntingdon

Perry

Bucks

Lebanon

Westmoreland

Mont-

gomery

Washington

Cumberland

Lancaster

Phila-

delphia

Bedford

Chester

Somerset

Delaware

Fayette

York

Franklin

Fulton

Greene

Adams

From a 2015 baseline, Adams County can expect to see the following as a result of an aging population through 2030 (and as compared to statewide results):

Pennsylvania

Adams

31%

Increase in vulnerable older households, 2015–30

$3,980

Average annual income shortfall for vulnerable older households, 2030

54% increase

Change in the ratio of older to working-age households, 2015–30

$3,472

Cumulative additional taxpayer liability due to insufficient savings, 2015–30

$960 a year
or $80 a month

Additional household savings required for adequate savings in retirement, 2015–30

In 2030, on average, Adams County’s vulnerable older households can expect an annual income shortfall of $3,980 due to insufficient savings. Without new saving, county taxpayers will need to pay a cumulative $3,472 from 2015 to 2030 to maintain existing social services to older residents. The burden is exacerbated by the fact that the aged dependency ratio—the number of aged 65 and older households to households aged 20-64—will rise by 54%.

However, household savings of just $960 a year—$80 a month—over this period can erase the gap and allow for a retirement without lifestyle changes driven by inadequate savings.

Legend: statewide average line

County	Taxpayer burden	Vulnerable household increase	Dependency ratio increase	Average income shortfall	Additional savings required
Pennsylvania	4,009	27	48	4,840	1,170
Adams	3,472	31	54	3,980	960
Allegheny	4,393	20	44	4,800	1,160
Armstrong	3,595	23	68	4,260	1,030
Beaver	3,665	22	54	4,810	1,160
Bedford	3,249	29	47	4,330	1,050
Berks	3,732	26	42	5,300	1,280
Blair	4,885	28	51	4,260	1,030
Bradford	4,136	30	53	4,390	1,060
Bucks	4,668	18	80	5,800	1,400
Butler	4,443	24	64	4,640	1,120
Cambria	3,763	20	41	4,310	1,040
Cameron	4,449	22	92	4,780	1,150
Carbon	4,183	26	62	4,220	1,020
Centre	3,033	29	31	4,210	1,020
Chester	4,956	16	64	5,940	1,440
Clarion	3,560	40	53	4,160	1,000
Clearfield	3,564	32	45	4,450	1,070
Clinton	3,546	22	31	4,290	1,040
Columbia	3,736	16	38	4,580	1,110
Crawford	3,284	29	54	4,420	1,070
Cumberland	4,457	24	38	4,800	1,160
Dauphin	4,388	46	62	4,520	1,090
Delaware	4,402	29	55	5,020	1,210
Elk	3,912	17	65	5,040	1,220
Erie	3,441	36	49	4,740	1,150
Fayette	3,627	33	49	4,160	1,000
Forest	2,121	12	26	3,740	900
Franklin	3,398	26	37	4,310	1,040
Fulton	3,311	28	37	4,100	990
Greene	3,793	32	49	4,160	1,000
Huntingdon	2,847	25	22	4,450	1,070
Indiana	3,350	29	37	4,070	980
Jefferson	3,549	24	52	4,550	1,100
Juniata	3,697	34	52	4,430	1,070
Lackawanna	4,166	20	36	4,850	1,170
Lancaster	3,899	24	39	4,890	1,180
Lawrence	3,605	21	47	4,610	1,110
Lebanon	3,805	27	44	4,720	1,140
Lehigh	3,934	29	48	5,070	1,220
Luzerne	3,940	19	41	4,680	1,130
Lycoming	3,706	31	47	4,220	1,020
McKean	3,311	38	52	4,000	970
Mercer	3,462	17	37	4,270	1,030
Mifflin	3,456	13	24	4,050	980
Monroe	3,144	53	77	4,680	1,130
Montgomery	5,227	15	54	5,750	1,390
Montour	5,261	5	32	4,470	1,080
Northampton	3,736	22	52	4,970	1,200
Northumberland	3,637	24	43	4,480	1,080
Perry	3,083	32	65	4,710	1,140
Philadelphia	3,317	49	40	4,460	1,080
Pike	3,304	40	59	3,820	920
Potter	3,349	25	32	4,820	1,170
Schuylkill	3,783	22	33	4,670	1,130
Snyder	3,252	28	39	4,420	1,070
Somerset	3,287	20	47	4,160	1,000
Sullivan	4,012	10	62	4,750	1,150
Susquehanna	4,356	31	57	3,850	930
Tioga	3,538	26	45	4,230	1,020
Union	3,244	12	26	4,830	1,170
Venango	3,359	39	65	4,170	1,010
Warren	3,844	32	69	4,460	1,080
Washington	4,586	20	60	4,650	1,120
Wayne	3,515	32	47	3,680	890
Westmoreland	4,373	16	56	4,660	1,130
Wyoming	4,199	39	62	4,290	1,040
York	3,656	32	57	5,070	1,220

Notes

1. Program spending includes Medicaid (long-term care, home and community-based services, long-term managed care, payment for Medicare drug program, and other Medicaid expenditures); PennCARE; property tax and rent rebates; PACE and PACENET; and free and reduced fare transit.

2. Sufficient income for residents aged 65 and over is defined as 75% of their annual working age (50-64) income, with a minimum retirement income of the federal poverty level. Incomes above $75,000 for older residents are considered sufficient regardless of the proportion of working-age income replaced.

3. All dollar amounts in this publication are in 2015 dollars and do not account for inflation.