In an update to our 2018 report produced by ESI for the Pennsylvania Retirement Security Task Force, which undertook analysis of the statewide revenue and expenditure implications of insufficient retirement savings in Pennsylvania over the 2015-2030 period, we looked at updates to each category of statewide and county-level impacts for the years 2020-2035.
Pennsylvania’s elderly (65+) population is projected to grow from 2.49 million in 2020 to 3.04 million in 2035. This growth in the elderly population will have a variable impact on Pennsylvania’s fiscal position depending on retirees’ financial preparedness. Those with sufficient savings will rely less on many state funded programs and have more disposable income available to circulate in the state economy while those with insufficient savings will be more dependent on state programs and circulate less money through the economy resulting in less economic output for Pennsylvania and few jobs and earning opportunities in the workforce.
Pennsylvania retiree incomes in 2035 are projected to fall short of recommended replacement rates by an average of around $7,800 in 2035 for the 1.2 million elderly households with less than $75,000 in annual income. At a standard market return, enhanced savings of around $160 per month (or around $1,900 per year) over 30 years would generate sufficient additional income to address this average gap.
Program expenditures for elderly Pennsylvanians are expected to grow significantly due to the aging population and excess medical cost growth. Over this fifteen-year period, Pennsylvania’s cumulative state cost growth from insufficient savings is estimated to total $14.6 billion and a cumulative tax revenue losses total $3.2 billion over the 2020-2035 period.
To learn more about our findings and view the interactive dashboard, visit the Pew Charitable Trusts website.