Media Coverage | Improving your financial health—Rep. Wheatley, state treasurer say it’s all about saving money

Aug 28, 2019

Last weekend, state Rep. Jake Wheatley, D-Hill District, sponsored his 6th annual Health and Wellness weekend, featuring live entertainment, food, art, children’s events, health seminars and races, and basketball. But before that even started, Rep. Wheatley and the House Democratic Policy Committee, on which Rep. Wheatley serves, held a roundtable discussion on the financial health and future of the state and its residents—young, old and in-between.

The first insight provided at the Friday, Aug. 16 meeting at the BNY Mellon Building, Downtown, was a sobering analysis by Deputy State Treasurer Keith Welks on what he called “The Retirement Crisis.” He handed out a paper with some numbers on it.

“Does anyone know what the median amount of savings people have is? It’s that first figure: $0,” he said. “Fifty percent of Pennsylvanians have no savings. And that means, for the cohort retiring between 2015 and 2030, they will cost the commonwealth $15,700,000,000—that’s $14.7 billion in services they are, by law, entitled to, and another $1 billion in lost tax revenue because they are no longer working and aren’t purchasing goods and services.”

Thus, to say that the state has an interest in getting people to save more is an understatement. Welks noted that people are 15 times more likely to save for the future if they have an IRA (Individual Retirement Account) through their employer. Unfortunately, $2.1 million workers don’t do that, mostly because they work for small companies that cannot afford to set up a plan, nor can they afford the regulatory burden the federal government imposes on having one. This also factors into the “wealth gap,” he said, because minorities and women are more likely to work for small employers, as are low-income workers.

But there may be an alternative, Welks said, and it’s in the works.

“It’s called an AutoIRA. Essentially the state operates a giant IRA structure and invests in IRAs, Roth IRAs, other products, but because we can do it at a huge scale—with potentially millions of clients—we’ll get much better rates,” he said. “Individual employees can opt out, if they choose, and there would be a default plan for those who don’t choose one. But it could make a difference in people’s lives. We have bi-partisan support in both the state House and Senate and I’m cautiously optimistic that by next year, we’ll be working with employees and setting up plans.”

Welks also noted that the treasury already offers a “529” savings account program that allows parents to save money—tax-free—for their child’s college education. It also has the added benefit of locking in the cost of college credits. But even with that, people don’t take advantage of it, so he said state Treasurer Joe Torsella is looking at a pilot program that would automatically set up an account for every newborn in the state and prime it with $100. The treasury gets the children’s data from county health officials, anyway. All parents would have to do is claim the account. Last year, Welks said, there were 140,000 births, so that would put a $14-million price tag on the program.

But it’s the kind of incentive that can work, said panelist Jeremy Resnick, who chairs the Propel Schools Foundation. As the New Pittsburgh Courier reported in April, Propel started “Fund My Future” in its schools in 2013 as a way to encourage and involve families in saving for their child’s education. They do it with monthly prize raffles (some cash prizes reach $2,000 or more). But to qualify, a parent has to have made a deposit into their child’s account in the past month.

By 2015, 1,500 families were participating. Through a partnership with the City of Pittsburgh and Allegheny County, the program was opened countywide at the end of 2017. Now there are 3,500 families participating,

“I’m here because we want to give our families and students hope for a better future,” said Resnick. “Savings is a concrete embodiment of that hope.”

Toni Corinealdi, the program manager for Fund My Future, told the committee that 47 percent of participants said they saved more money, saved more frequently, improved their budgeting or increased their financial health—and the kids love it.

“I can personally attest to this because I have a 7-year-old granddaughter who is a participant,” she said. “Whenever she gets money she wants to go to the bank—she knows where she banks and how much is in her account.”

The committee also heard from Henry Horn-Pyatt, of Mayor Bill Peduto’s office, and Sarah Dieleman Perry of Neighborhood Allies about their partnership, creating Economic Empowerment Centers across the city where people can meet one-on-one with a financial professional, for free, to help with reducing debt, improving credit scores, saving for a house, etc.

“In our work revitalizing neighborhoods, we realized that if the people who live in our neighborhoods are no better off, we haven’t done our job,” said Perry. “We now have nine financial counselors working in 13 different locations around Pittsburgh.”

The committee also heard from Ron Celaschi, CEO of Clearview Federal Credit Union, who said it sponsors Junior Achievement’s BizTown project and various high school “Reality Fairs,” where students have to make budgets, pay utility bills, etc., as part of its commitment to financial literacy education. He said it also proactively helps its members attain their financial goals.

In thanking everyone, Rep. Wheatley admitted that he would not be financially stable today if not for the personal tutelage—and well-meaning hectoring—of Richard Witherspoon at the Hill District Federal Credit Union, located on Centre Avenue.

“It’s hard for someone who’s basically private to bear all that sometimes-embarrassing stuff,” said Rep. Wheatley. “But Richard was really good. He helped me a lot.”

To which Horn-Pyatt said of his program: “We’re just trying to get everyone a Richard.”

Top Header Image Photo Credit: Prototyping Larimer Stories by artist John Peña, photo by OPA