There’s A New Retirement Normal For Public Employees: Supplemental Savings

Late last year, Congress passed and President Biden signed SECURE 2.0 legislation as part of the Omnibus spending bill. Enactment of this legislation is a clear signal that policymakers understand the depths of the frightening retirement savings shortfall facing millions of Americans. The reasons are many for the nation’s retirement crisis – from rising costs to fewer pensions to longer life expectancy.

Despite these challenges, one segment of the workforce has been on stable ground when it comes to retirement: the state and local government workforce. Today, the vast majority of state and local workers have a defined benefit (DB) pension, and nearly three-fourths of public employees participate in Social Security. Many state and local workers also are offered a retiree medical plan by their employer and have access to supplemental individual retirement savings plans similar to 401(k) accounts in the private sectors.