 Okay, we're back. We're live. It's 3pm. It's the 3 o'clock block, and we're talking about aging and grace, and we have two very graceful people with us from AARP. That's not the association for, what is it? Retired persons. Because they gave that up. It says AARP. It's so efficient. Okay, that was some years ago, actually. Okay, to my left, Sarah Gill and to her left, Jessica Woolley. Sarah Gill is with the National AARP in Washington, and she flies around the country and she talks to people and delivers the good word, right? Am I right? Yes, sir. Okay, and she's here on a bill. We're going to talk about that bill in a minute. And Jessica Woolley is, what's your title with the AARP here? Advocacy director. Okay, in Hawaii. You're the Hawaii person. And you had a previous life. Can you tell us a little about that and why it's relevant? Sure. Well, I'm a small business owner, and I worked with Aina Aloha Consulting and also previous to that, for six years, I served in the legislature and the house. The Hawaii legislature. Yes, and before that, I was deputy attorney general, and then before that, legal aid society poi. Okay, wow. What a career. Wow. Okay, remember, all those things about Jessica, that feeds into our discussion. All those things are relevant. She's a lawyer. Okay, this is a law student. Okay, Sarah, tell us what AARP nationally does. Sure. AARP is an advocacy organization. We're a nonprofit. We represent the interests of the 50 plus so that people can live with dignity as they age. And that includes all sorts of different advocacy pieces. Today we're here to talk about retirement. Okay, that's a fair thing because retirement is pretty central for seniors. In fact, sometimes it's critical. Yeah, absolutely. I can give you facts and figures on that one. Okay, and Jessica, can you talk about what the local does? What is the AARP local in Hawaii do? Sure, we have a lot of programs for people over 50, and we really reach out for advocacy purposes at the legislature, as well as just programs to help people age well. So important. Got to age with grace. Yeah, and you know, I think nationally right now, the second fastest growing group, what do you think it is? 100 years and older? The fastest growing group, 85 and older. So we have a changing population. It's a really important time for us to talk about our policies and how we address our aging population. Yeah, we have to make their lives reasonable. That's including my life. I've got to make my life reasonable. And the great tragedy here and elsewhere is that sometimes it doesn't work that way. Sometimes people work a whole lifetime, and then they get to be elders and seniors, and their lives are not reasonable. And we have to prevent against that. We have to take care of them. This is caring for your fellow human being. That's just why it's such a good organization. And you have how many members? 38 million. And my question before, how do you sleep at night? There's not enough time to sleep. We will sleep when everyone can comfortably retire. Okay, so the problem is money, right? Yes. When you get to your later years, you may not have enough money. And I can't give you exact demographics, but there are fewer pension plans, fewer retirement plans out there now than there were before. And a lot of people hit their elder years without a whole lot of money. And they got to rely on social security, which the government in Washington these days doesn't like too much and we can't be totally confident that it'll continue forever. And by the way, I'm hoping you guys can stop that. You've got to protect social security. We're on it. Okay, all right. Okay, but the problem is that when you get older, you may not have enough money, even with social security. And without some kind of pension plan, retirement plan, you're not going to have a reasonable senior period in your life. So you guys are addressing that. What's the problem as you see it? And what are you doing? That is a great intro and a great question. Thanks for having us today. We're really excited about it. In fact, I think we have a graphic that talks a little bit about how big the problem is. As you can see, the risk of financial insecurity and retirement is on the rise. In fact, in the 1980s, roughly one out of every three households was at risk for financial insecurity. And I always like to say, that doesn't mean you're not going to be able to visit your grandkids or buy a birthday gift for someone. What it means is you're not going to be able to keep the lights on. You won't be able to afford rent or medication. Now, the risk today is roughly one out of every two households. So you can see that's substantially worse than it's been. To your point, people are just not saving enough for retirement. But we think that's because they don't have access, access to good retirement plans out of their regular paycheck. Okay. When you want to go to the next slide. Next slide, please. Let's go to the next slide. Oftentimes we get the question, why is ARP working on this issue? Most of your members are already retired. But there's two things. First, this is a ubiquitous problem. It's a problem that impacts every age group. As you can see on the screen, the 55 to 64 age cohort, almost half of them don't have any money saved for retirement. They have no assets saved. So this is true across all households. And we really, really need to work on this issue because otherwise people won't be able to live independently as they age. Isn't part of an education saying, look, you know, it's not going to come from heaven. You have to do things while you're in your working years to save. I mean, isn't that part of the problem that people don't see that, they don't realize that there will be a reckoning? I think that's part of the problem. But you know, when we survey people, they tell us overwhelmingly, if you made it easier for me to do this, I would save. But everybody has their own life going on. Everybody is paying their bills or taking their kids to soccer practice. We are a nation of consumers. We consume everything. The ads fly at us all day long. We think we got to buy things and we spend all our money. And the question is, where do you start? As a consumer, where would you go to open up your own retirement plan? Especially there's so many people that don't even have a bank account. How would they navigate this environment? And I think the next slide talks a little bit about that. So if we could, perfect. So in fact, the statistics are startling. Since the 1970s, the number of people who have had access to a way to save for retirement out of their regular paycheck hasn't budged. That's four decades. And now imagine this, right? We've got the creation of the internet. We've got social media. We've got all these new technologies. And nothing is cracking that nut about how to make sure people are financially secure in retirement. We think Hawaii saves us this. Wow, that's really, that's really shocking. It's scary, but it's nice to have some kind of solution to have a problem with a real solution. Well, it's a real problem and it needs a real solution. And nobody better but AARP to figure out what that solution might be. So what have you figured out, Sarah? Well, what we know is that behavioral economics is the key. So making the right way the easy way is what we have to do. So we need to use features like automatic enrollment, automatic escalation, not have too many different investment products. They just need to be the right products, the right investment options, and fees need to be low. These things need to be accessible to everyone. But there's always a risk in the market. I read the paper this morning and people are expecting some kind of recession in 2020 or 2021 and maybe before. And so you put your money in an investment account. How can you feel comfortable about that? Can you find a product that will save me in the event of a recession? Right. And I think that's to your early point about sleeping at night. I think a lot of people, that's what keeps them up is how am I going to retire and where should I put my money? And that's one of the things these state programs are trying to address. So they use new tools like target date funds, which are basically investments that are based on your age of projected retirement. So it's kind of a set it and forget it approach. If you want something that's more aggressive, you can do that. If you want something that's more conservative, you can do that as well. Oh, you have choices. We have choices. This is very good. So you take some responsibility here. Absolutely. This is all about having the individual take responsibility. Absolutely, it is. And I think we have a slide to talk a little bit about how Oregon works. First slide. Before we get to Oregon, let's talk about this because one of the questions I get all the time is there are so many retirement products out there. People can already do this. And the answer is sure. There are tons of retirement products available, but people aren't using them. If you don't have a way to save out of your regular paycheck, only 5% of people will go out on their own and open an IRA. Whereas if they're automatically enrolled in a plan at work, they're 20 times more likely to save. 20 times 5. 20 times more likely. That's much better. So you have to make it easy for them. Absolutely. And when you say you, you mean the government. Or you mean the employer. Or do you mean both? You know, I mean everybody has a little role to play here. So the next slide talks about Oregon saves, I believe. Yes, perfect. So Oregon saves is something that Hawaii is considering implementing here. And essentially the way it works is that the state says, okay, employers, we know how important it is that every worker has a way to save for retirement out of their regular paycheck. So you need to give your workforce a way to do that. But to make that easier for you, we're going to set up a back up plug and play 529 college savings plan style retirement product that you can use. That's 529. College savings plan. People might be familiar with that. The state, it's a public-private partnership. So the employer doesn't have to run it. All they have to do is make sure the payroll deduction, the money comes out of the worker's paycheck and goes to the private sector provider. Okay. In the nature of what? It's not a tax. It's like a contribution to the Aloha United fund or something like that, right? It's voluntary and the employer is helping out. Exactly. And in fact, the employer is required to keep their participation very minimal. We know this won't work if it doesn't work for employers. And employees retain control always. So the employee decides how much they want to put away, if they want to save it all, and where they want to invest. What kind of, you know, where you recommend as to how much I should, what percentage of my income, how much in dollars should I be, you know, targeting here? What do I do? I think people can often get a little bit scared by the numbers when they hear, you know, your lifetime income, you could need as much as 12 times your final salary in order to live comfortably. But you don't always have to, you don't have to jump at that whole number up front. If you put away 5%, 6% out of your regular paycheck and then slowly increase over time to 10%, that should get you started off really well. Sure, because then it's going to, it's going to go into multiples over the years. And we're talking for young persons in the 20s or 30s. I mean, that's really young. Thank you. You know, over a lifetime, that's going to compound. And so it may seem like only 5% now, but at the end of the day, it's going to be much more than that, depending on the economy. Absolutely. Okay, so now the state. The Oregon saves as a statute in the state of Oregon. What does it say? How does it work? Who's responsible to do what? So there's three players here. The state basically creates this kind of Costco model of retirement, this warehouse model of retirement. So what they're doing is they're pulling together a bunch of small businesses, your main street businesses. And you're saying to them, I can get you a better deal because I'm going to pull you together and negotiate on your behalf. So the state plays that role of negotiator and they make sure that the investment providers in the private sector are offering appropriate products. So it's approval of investment providers. And if I'm a stockhouse or something, I go to the states, I like to be an investment provider for this program, and they'll look at me and vet me and decide I'm okay. And then they'll include me in an array of investment advisers who qualify under the plan. And then the individual who's making the contributions, he can pick one, right? Exactly. That's up to him, his responsibility. Exactly. The individual, the employee, decides how much they want to put away and where they want to invest. And all the employer does is run the payroll deduction. So they're taking the money out of their employee's paycheck and directly transferring it to that investment manager. It doesn't sound like it's very complicated if you want to know. Why do we need a statute? We need a statute because over the last four decades, as you saw on the screen, the number of people who have had access to retirement plans hasn't changed. So if we keep doing what we're doing now, that one out of every two people who's at risk for financially insecure retirement is going to keep growing. So this is government's way of encouraging people. It's incentivization. It's making it easy for them. It's a mechanism. And by doing that, encouraging them, yes? It's a mechanism. A mechanism. It's a program. Providing a tool. And you can fall into it. And that makes it easier for you. Otherwise, you're kind of on your own and you're making decisions. You may not be all that comfortable or confident in what you're doing. This helps you with the level of confidence. Confidence leads people to make investments in their own future. Exciting. Okay. And it's working well in Oregon? It is working very well. So what we know is that there's about $14 million saved for retirement, mostly by people that have never saved for retirement before. Also, that average income of the people saving is about $29,000 a year. So we're not talking about super-rich people saving for retirement. We're talking about people we've had a hard time getting to save for decades. Is Oregon the only state or are there others? So there are, depending on how you count it, six to ten states that have already passed legislation. They're working on getting them up and running. And then you've got another 20 to 30 states that are considering it. One final question before we go to the break. Why doesn't the federal government do this? Wouldn't this be good on a national basis exactly as you have described it? Why doesn't the federal government do it? There are conversations going on in the federal level about Congress doing something. I would say as a person who has seen all these states in action that states are the right place to do this because the state of Hawaii, for instance, can create a program that works for its residents. And what works for Hawaii may not work for Missouri or North Carolina. So we need to make sure that the solution that you have here in Hawaii is right for you. Just as well, but we should have it in every state. We should have something in every state. There's a bottom line set of circumstances that's present in every state. Okay, that's Sarah, that's Jessica. We have an intern, by the way, whose name is Parker. So if we had the intern with us here today at the table, we would say Sarah, Jessica, Parker. We're going to have a break now. Wonderful. Hi, I'm Rusty Komori, host of Beyond the Lines on Think Tech, Hawaii. My show is based on my book, also titled Beyond the Lines, and it's about creating a superior culture of excellence, leadership, and finding greatness. I interview guests who are successful in business, sports, and life, which is sure to inspire you in finding your greatness. Join me every Monday as we go Beyond the Lines at 11 a.m. Aloha. Hey, Aloha. My name is Andrew Lanning. I'm the host of Security Matters Hawaii, airing every Wednesday here on Think Tech, Hawaii, live from the studios. I'll bring you guests. I'll bring you information about the things in security that matter to keeping you safe, your co-workers safe, your family safe, to keep our community safe. We want to teach you about those things in our industry that may be a little outside of your experience. So please join me because security matters. Aloha. Let's start. OK, we're back. We're live with Sarah, who is a shy child, and Jessica, who has experience in the Hawaii State Legislature. So let's turn to the state of Hawaii now. You like what's happened in Oregon. It sounds like a perfect solution for Hawaii. There are a lot of people in Hawaii. I mean, I know some of these situations myself where people have worked hard all their lives and something intervenes, some kind of super-expense intervenes, who knows what. And they're in deep kimchi by the time they get older. They have no savings. And they've been responsible, respectable citizens, working hard, devoted employees all their life, but not enough money. This is really bad. So we have to find a way. Oregon seems like a good way. And the AARP seems like a good organization to advance the same kind of bill in Hawaii. What do you think? So have we done that? Well, there are two bills that are still live in the legislature. So one is in the Senate, SB 1374. And so that is Senator Taniguchi's bill that would essentially set up a implementation plan and implement it under BNF, Budget and Finance. So it sets up a program very similar to Oregon Saves, and it could probably get up and running in a couple years. Why that long? Well, it probably wouldn't actually take that long to set it up. But part of the process is figuring out who's going to come in first. You know, you don't want to have everybody come in all at once. And, you know, Sarah can talk about that in terms of how Oregon has staggered it. But, you know, you could definitely set it up within a year. But I think before you start to see full implementation, you know, I think it would be a couple years. If people know about this, I mean, you're a membership in ARP here in Hawaii know about this possibility, because it seems to me even knowing about the possibility would get my savings juices, my term. My savings juices going. I would start thinking about saving. I think a lot of people do know about it. And more and more, you know, part of it is that education part, you know, what's happening at the legislature. A lot of people don't know what's happening. But the reality is small businesses have been surveyed and they have responded. There are 216,000 estimated employees who don't currently have access to retirement savings. That's a big percentage of our workforce. So it really puts our small businesses at a disadvantage now if they don't have these options like Oregon. So it's really something we have to take action. It's a real win not just for the employees, but those small business employers who can be more competitive now in their industry. And they can know that they're taking care of their workers. Or the workers are actually taking care of themselves. Well, but it takes the edge off the problem. And the problem is in a small business, a mom and pop business, they don't have a pension plan for their employees. So their employees are so well they don't have anything. They don't even have an HR department. I mean, who's going to run the payroll at action? So no benefits and no retirement benefits. And so if this bill is passed, and that helps a small business person because it offers the employee an option. It gives him some comfort. And thus there is at least an option on the table which can make it softer and easier to work for such an employer. Yeah, even without a fancy pension plan. Absolutely. And so our survey showed 8 out of 10 employers would support legislation to provide these services. Automatic deduction. So it makes a lot of sense for our private sector would make us a lot more competitive. And at the end of the day, it's going to save government money. I mean, that's why it's really a triple win for our government services, our social safety net that really ends up paying. Because if they don't have any money, they're going to be on the street. Yeah. If they don't have any money, we're going to have to bail them out. We're going to have to, as a moral, ethical matter, we're going to have to help them. And that means government mostly. That's right. So just in a short 15-year period of time, based on some assumptions, the state government alone would save over $30 million. Yes. No surprise. So now this was in the 2018 legislature. What happened? It died in conference. There was a Senate bill that died in conference at the very end. Yeah. Okay. You don't have to say anything. Let me say it. That was a gross mistake. This is a bill that doesn't cost the state of farthing. This is a bill that works for everybody. This is a bill that's humane and beneficial for everyone in the community. Everyone in the community talked about it. For them to die, let that bill die in conference is wrong. And it's a big mistake on the part of the legislature. That's just me talking. But I can't imagine any counter-argument. I can't imagine anyone opposing this bill. But it died. Okay. Now we're here in 2019. What's happening? So the Senate bill has moved through WAM and so it is set up for our third reading and to cross over into the House and the House bill we're waiting to see if it will be scheduled and financed. There's a couple more days left. Okay. Cross over coming soon? Yes. Who's here? Who are your champions? So Representative Johansson, Chair Johansson on the House side, HB 1189 and Senator Taniguchi on the Senate side. Take a shout out to Johansson and Taniguchi, shout out. Thank you guys. And we've had a lot of support. I mean, Senate President's been supportive. We've heard from Psyche's office, from House Speaker's office. So we're getting a lot of support. So we're very hopeful. But you never know until you know. But there's no good reason not to pass this bill. And if they do nothing but pass this bill, a little session will probably be better. There's a lot of bills that have much less value than are pending in this session. I could name names and I could name bills. This one's really good. This one's great. This one's an easy, easy bill. And AAP National will be happy to see this. That's one of the reasons you're here, isn't it? I'm here to help out in any way I can. Okay. You're campaigning in other states for the same bill. Absolutely. You should talk about New Jersey, actually. Big win in New Jersey. We have a bill that just got sent to the governor's desk yesterday, actually. So it's been several years in the making and we're thrilled that the more than a million people in Jersey are going to get access to retirement plans for the first time. Well, anything is great that AAP does this. I mean, on the national level. Because there's a vacuum. And you're filling the vacuum and you're making it better for seniors all over the world. And we have to do this kind of thing. It's moral, humane, caring kind of bill. So my compliments to you both, your efforts in that regard. What else you got on the deck, actually, Jessica? Well, we're also working on KapunaCare, KapunaCare givers, you know, the executive office on aging, making sure they're funded. A lot of these programs are on the table right now because of the new house budget system. So, yeah, there's a lot of concern that some of those social safety net programs are in jeopardy. So we're fighting hard to protect them. There's so many issues about the social safety net and indeed there's more of a need for it than it was before. And the Green New Deal you know, has an element. One of its various liberal elements is a guaranteed basic income, you know. And I really wonder how that would work if it ever passed in a conservative or even a moderate Congress. But assuming it passes it seems to me that that would also conceivably apply to seniors. Why not? Seems appropriate. Kind of as a retirement package. Well, you know, the joke is the new word for retirement is work. So what we know is that seniors are working longer. They're raised in retirements and they know they're living longer. As Jessica said earlier, I mean they're telling millennials to plan to live to the age of 100 financially. So we all could benefit from a little bit of extra financial planning up front. Yeah. But the other thing about that is your senior years can be like your junior years. The active, productive. It can be, you know, all kinds of psychic benefits and personal benefits. And you can lead a very nice life than you could before. It's not just an old downhill. It's in many ways, it's an uphill. And you can achieve, the seniors can achieve you know a new chapter. A better chapter in seniorhood so to speak. And AARP is helping them do that. That's right. So I mean you're giving them the gift of life in a way, aren't you? Well, thank you. That's very meaningful. We're all about disrupting aging at AARP. We really believe that it's not, you know, 60 is the new 80. What it is, is I'm happy to be 60 and I'm living an active life and I'm excited about the things that I've got going on right now. So this bill is really to be able to live independently as you age and live the life you want to live as you're retiring. So let's talk about in one other element of this is suppose I'm really retired but I'm working also. I'm making some money. I can set, under this bill in Oregon and hopefully in Hawaii, I can set the time when I stop paying. I can pay until I decide not to pay, right? So I'm, you know, 60, 70, 80, who knows what. I'm still productive, I'm still earning some kind of living. I don't have to stop my payments. I don't have to withdraw from the investment account. I can keep doing it. You can keep putting money away as you are working, absolutely. These are IRAs, at least in Oregon's case, and likely Hawaii. So all the same rules that would apply to an IRA today apply to you under the Hawaii Saves Program. So it is an IRA. And that means when you put it in, you're putting in after-tax dollars but the gains in the plan are tax-free and the withdrawals are tax-free. You're getting the tax-free treatment when you need it. This is really, really a good thing. So the other, the last thing is you know, so I don't take it out or I don't take all of it out. It's still largely in there. And then I fall on the curb. I'm gone. I'm finished. I'm dead. What happens to the money in my plan? It's still your money. So unlike a pension plan where after you pass away you don't have additional benefits, this is more like a 401K. It's like an IRA. So that money is your money. And that's really important for a state program like Hawaii Saves, like Oregon Saves. Because the state can't access the money. They can't sweep it. They can't take the money away. You own it. It's yours in entirety. There's two words that come to mind on all of this. Not only in Oregon but in Hawaii. Not only in the Oregon legislature but in the Hawaii Square Building. No brainer. We'll take it. One word or two. Thank you very much. Good to meet you. Jessica, great to have you. We'll do it again. Aloha.