For two decades, segments of Hawaii’s senior population have been out-pacing national averages. Now the “silver tsunami” is rolling in, with the oldest of the baby boomers in their early 70s. Next year, according to state projections, 1 in 4 Hawaii residents will be at least 60 years old; and by 2035, 1 in 3.
What’s more, many of us will live two to three decades longer than our parents and grandparents, as the fastest-growing age segment in the United States is now the over-age 85 bracket; and the second-fastest, centenarians.
All this gives the Legislature’s Kupuna Caucus plenty of senior-related issues to size up at the state Capitol. Among this session’s advancing bills, the caucus is supporting proposals to help residents age in place in their own homes, assist working caregivers, and establish a Hawaii retirement savings program for private-sector employees.
“Greater resources are needed to help care for our kupuna,” said Sen. Sharon Moriwaki, a convener of the caucus. Given the state’s aging profile, “it behooves us to have good, effective programs.”
>> Among the measures the caucus supports: Senate Bill 1374, which would initiate steps to setting up a public-private partnership for a state-based savings program, dubbed “Hawaii Saves,” to help workers prep for retirement.
AARP Hawaii State Director Barbara Kim Stanton ranks Hawaii Saves as a top priority on the nonprofit’s legislative agenda.
“It’s a low-cost plug-and-play retirement savings option that business owners could use but don’t have to run or pay for,” Stanton said. The state would set it up, but privately run financial services companies would hold and invest the monies workers contribute.
She added, “It would help workers grow their savings so they don’t have to just work till they drop.”
The program’s envisioned automatic individual retirement account (auto-IRA) would target employees at small businesses that do not offer a 401(k) or other retirement plan. This group, which encompasses about half of Hawaii’s private-sector workers, some 216,000 people, is at risk of retiring with meager savings to supplement Social Security.
This year, the average retiree’s annual Social Security benefit is slightly more than $17,500. That’s better than nothing, but next to impossible to live on in high-cost-of-living Hawaii.
In written testimony supporting SB 1374, the Hawaii Appleseed Center for Law and Economic Justice said: “Encouraging and enabling our working-age population to save for retirement is crucial to prevent more poverty among our seniors and to protect our state’s future economic health.” In Hawaii, according to the U.S. Census Bureau’s supplemental poverty measure, the senior poverty rate is 17 percent, the sixth highest rate in the nation.
In addition to benefiting workers and employers, AARP sees Hawaii Saves as a winning bet for taxpayers.
“If we don’t do something now to turn the tide … so this set of workers can have the power of compound interest working for them, we’re going to have a lot of people who may be retiring poor; and taxpayers will have to foot the bill as we increase public assistance programs,” Stanton said.
Similar plans
About half of all states have considered plans to offer similar programs, and at least five have launched them or have taken steps toward doing so. They vary in details but, in general, workers are typically automatically enrolled in a state-sponsored IRA program and have contributions withdrawn from their paychecks, although they can choose to opt out or change their contribution.
The Hawaii Saves proposal is modeled after OregonSaves. Through that program, the deduction is an automatic 5 percent in gross pay unless the worker opts otherwise. The state directs the money gathered to privately run low-cost investment funds. The participating worker’s savings are made with after-tax dollars; and contributions are tax-free when removed.
Workers have a limited range of investment options, mostly index funds and other low-cost funds, and pay an annual account fee of 1.05 percent to cover state and investment costs.
As of early February, OregonSaves, which started in mid-2017, counted roughly 63,000 workers (72 percent of those eligible) as taking part in the program. On average, employees had contributed about $100 monthly, and had so far set aside a combined $12.5 million, with an average withholding of 5.6 percent of salary.
While Stanton and other SB 1374 supporters tout OregonSaves as “hugely successful,” the bill has opponents. Some say here and elsewhere state laws could conflict with the federal Employee Retirement Income Security Act (1974). So far, though, OregonSaves is not facing a legal challenge.
Also, arguing that it’s not the role of the state to compete with the private sector, some critics complain that unless safeguards are in place, a state-sponsored low-fee program would have an edge over banks and other entities that currently offer retirement programs, prompting employers to drop their current plans and join the state-run plan.
Savings education
In addition, some assert that rather than establishing a new state retirement system for private sector employees and employers, a more appropriate state move would be to conduct an education and outreach program about the need to save for retirement.
To that, AARP counters that financial literacy alone rarely prompts savings, especially among cash-strapped workers. But when an attractive out-of-sight, out-of-mind option for payroll deduction is folded in, studies show that workers are 15 times more likely to save for their future, Stanton said.
More senior legislation
Other kupuna-related measures:
>> Another Kupuna Caucus-backed proposal is Senate Bill 1025 (House Bill 467), which would make changes to Hawaii’s first-in-the-nation Kupuna Caregivers program, established two years ago.
Given the combination of the common desire among seniors to live at home for as long as possible and the potential savings-busting expense tied to assisted-care living, family members are increasingly providing long-term care to kupuna. There are an estimated 154,000 unpaid family caregivers in Hawaii, which has the nation’s highest percentage of multigenerational households.
Kupuna Caregivers helps family caregivers remain in the workforce by issuing vouchers that can be applied to bills for home care aides as well as adult day care, transportation, personal care and various homemaking services. In an effort to improve the program’s flexibility and assist more caregivers, SB 1025 aims to change the voucher setup from $70 per day to $350 per week.
The caucus also wants to see the Legislature allocate a gradual increase in state funding for the program, and task the state’s Executive Office on Aging with drafting a plan to maximize participation. Kupuna Caregivers secured $1.2 million for the fiscal year 2019; and since its launch, about 13 months ago, it has served about 110 caregivers. When running at full speed, it’s expected to get $6 million in annual state funding.
Moriwaki describes the program as a worthy addition to the state’s “toolbox” for addressing challenges linked to the senior age brackets, as the respite voucher can help reduce the necessity for time off from work for emergencies, and lower the numbers of caregivers who must resign from jobs when they can no longer juggle employment and caregiving.
>> House Bill 465 (Senate Bill 1023) would provide full funding, $9 million, for the 20-year-old Kupuna Care Program, which helps frail seniors age in place in their homes by providing services such as homemaking assistance, delivered meals, and assisted transportation.
>> House Bill 468 (Senate Bill 1026) would secure funding to re-establish the Healthy Aging Partnership Program. Established in 2003, the program, which offers community courses emphasizes healthful habits and disease prevention, began in 2003 but lost funding last year.
>> Senate Bill 1024 (House Bill 466) would tag $3.1 million in funding for the Aging and Disability Resource Center, which serves as a cost-free one-stop site for seniors and individuals with disabilities seeking long-term support services. The state’s ADRC staff assesses eligibility for government-paid programs and helps assemble individual plans for long-term care needs.
The Kapuna Caucus, Moriwaki said, stresses that “as much as possible, the thrust should be keeping our seniors as healthy as possible and living at home as long as possible.”
