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Boosting Retirement Security for Mainers’ Golden Years

There is an estimated $7.7 trillion gap between the savings American households need to maintain their standard of living in retirement and what they actually have.  Only half of American workers believe that they will have enough money to live comfortably in retirement.


There are many reasons why American households struggle to save for retirement, including the shift away from employer-based “defined benefit” plans as well as rising health care and long-term care costs.  Longer life spans increase the risk of outliving retirement savings.  The economic and health impacts of the COVID-19 crisis may also pose a threat to retirement security.


As a Senator representing the oldest state in the nation by median age, ensuring that more people are better prepared for retirement is one of my top priorities.  Two bipartisan bills I have introduced would make it easier for more small employers to offer retirement plans and encourage employees to save more for their retirement.


Increasing access to employer-sponsored retirement plans is one way to help improve the financial security of many Americans.  Yet in our state, more than 200,000 Mainers in the private sector lack access to a retirement plan at work. 


In December 2019, provisions from my bipartisan Retirement Security Act were signed into law.  This legislation helps to expand access to employer-provided retirement plans by reducing their cost and complexity, especially for small businesses. 


In an effort to build on this law, I recently introduced the SIMPLE Plan Modernization Act, which would provide greater flexibility and access to employees and employers seeking to save for retirement by using SIMPLE (Savings Incentive Match Plan for Employees) plans.  These plans are less costly and easier to navigate than traditional 401(k) plans and provide an alternative approach for employers to help their employees save for retirement.


The SIMPLE Plan Modernization Act would make SIMPLE plans more accessible by increasing the contribution limit for most small businesses.  In addition, the bill includes incentives to encourage small businesses to move from a SIMPLE plan to a 401(k) plan when they are able to make this change.


My second bill addresses particular retirement difficulties experienced by our military families.  These families deal with the same challenges faced by many Americans when it comes to saving for retirement.  In addition, military spouses confront one hurdle that many others do not: frequent moves and changes in employment.


According to the Department of Defense, about one-third of military service members experience change-of station moves every year.  When service members move, their spouses usually relocate with them.  The military spouses may face periods of unemployment, where they are not able to participate in an employer-sponsored retirement plan.  When they do find a new job, they often work part-time, despite seeking full-time work, or are only able to spend a few years with their employer before moving again.  These factors often preclude them from being eligible to receive employer contributions to their retirement plan or from being fully vested in their plan.


The Military Spouses Retirement Security Act I have authored would provide a tax credit to small employers who grant military spouses accelerated eligibility for retirement plan participation, employer contributions, and vesting.


Specifically, my bill would make small employers – those with up to 100 employees – eligible for a tax credit of up to $500 per year per military spouse.  The credit would be available for three years per military spouse.  To receive the tax credit, small employers must make a military spouse eligible for retirement plan participation within two months of hire.  This legislation is one way we can acknowledge the sacrifices our military members and their families make on our behalf.


In my travels throughout Maine and in my work on the Aging Committee, I have heard countless stories of retirees whose savings did not go as far as they anticipated.  Adequate savings improves the quality of life for our retirees.  Giving those not yet at retirement age more opportunities to save, and to save more, would improve retirement security for millions of Americans and help ease the burden on entitlement programs that already are projected to be unsustainable.