Too many in Fresno are poor in retirement. A state plan can help them avoid that trap

It is no secret that poverty is one of Fresno’s greatest challenges. The latest American Community Survey by the U.S Census Bureau revealed that more than one in five households in both the city and Fresno County receive food stamps or other supplemental assistance. Bee staff writer Tim Sheehan determined that to be the highest rate by far among California’s most populous cities and counties.

Analyzing the survey data further, Sheehan also found that more than half of senior citizens in the city, and almost half in the county, cope with some degree of disability. Those, too, are the largest proportions among the 17 biggest counties and six biggest cities in the state.

Many of those disabled seniors also likely need food assistance. And drawing upon their savings to make ends meet? Here is where their problems get compounded, for those elderly people probably don’t have much, if any, retirement savings.

To ensure that younger low-to-moderate income people don’t land in the same predicament, the state is about to launch CalSavers. It is a retirement program especially intended to help low-to-moderate income workers save up for their senior years.

Fresno will be part of a pilot outreach that will launch next year. State Treasurer John Chiang will come to town on Wednesday to outline what is coming, but those curious can learn much on the CalSavers website now.

CalSavers is the result of legislation carried by state Sen. Kevin de León, D-Los Angeles, and signed into law by Gov. Jerry Brown. What motivated the bill was an impending crisis of Californians heading toward retirement:

75 percent of California’s low-and-moderate income retirees already rely exclusively on Social Security.

Nearly half of California workers will retire with incomes below 200 percent of the federal poverty level ($22,000 a year).

About 7.5 million Californians work for companies that do not offer a retirement plan. Two-thirds of those employees are people of color, with nearly half being Latino.

Fifty-seven percent of current retirees are women, and they make up 70 percent of the bottom quarter of retired people.

Under de León’s bill, any company with five or more employees will now have to either offer a retirement plan or give workers access to CalSavers. The program will be phased in for employers, with firms having more than 100 workers starting to participate in June of 2020. All companies with five or more employees will need to be on board by June 2022.

The program will be self-sustaining; there will be no cost to taxpayers.

The Howard Jarvis Taxpayers Association has sued to block the program, contending it violates a federal law, but Chiang told The Bee that CalSavers expressly exempts employers from having to meet those federal standards. The case is pending, but Chiang is confident the state will win.

The taxpayers group also argues that the state does not have a good track record of handling retirement planning. As examples, it points to the state employees plan and state teachers retirement, which both have large unfunded liabilities. The association points out that any employee can always create a private IRA with a broker.

Chiang says a private firm will make investments for CalSavers participants with state oversight, and he is aiming for the fees to be less than commercial rates. Once a worker creates a CalSavers account, he or she can take that plan to the next job opportunity.

While business owners must offer some sort of retirement plan to workers, employee participation is voluntary. But Chiang notes good reason to do so: “People ages 25 to 44 have twice the likelihood of retiring into insecurity than older workers ... Studies indicate if you engage in some type of retirement planning, it changes what the future looks like for that individual.

“The status quo is not working. So when we have voluntary participation in a plan such as this, you are putting people on the right pathway.”

One step for Fresno to get out of its chronic poverty is through better saving for retirement. Valley employers should become active participants with the state, and workers should create retirement accounts, either privately or with CalSavers, for their own good.