maryland small business retirement savings program

Control your financial future

Welcome saving for emergencies and retirement just got a lot easier..

Nearly a million Marylanders are working full-time without access to a workplace savings plan, so many don’t have money set aside for emergencies and retirement. MarylandSaves, created by the State of Maryland, is designed to help. MarylandSaves provides a safe, trustworthy automatic WorkLife Savings Account for Marylanders to employees of eligible businesses or those who choose to open their own account.

The program is also easy for employers to facilitate. Registration is quick and FREE for employers – in fact, the State will waive a $300 annual registration fee for employers that sign up.

Sign up for our newsletter to stay current on program activity.

Registration is open to all eligible employers. Be sure to register by December 1 to receive your SDAT waiver starting next year.

Certify exemption

Make an investment in your future. MarylandSaves is a flexible and secure way to save and plan for what’s ahead, even if you're self-employed .

Certify your exemption without an Access Code

If you have not received an Access Code and offer a qualified retirement savings plan, you can certify your exemption and claim your waiver here .

Maryland Comptroller Brooke Lierman Supports MarylandSaves

Great benefits to help you succeed

Employer benefits.

Be competitive by offering a great benefit to your employees that many small businesses don’t.

There’s no cost for employers to register and no employer contributions to make.

Getting started is fast, easy, and secure

Works seamlessly with any payroll process

Stay competitive by offering a great benefit to your employees

You save $300 a year in waived state annual report filing fees.

Savers benefits

Secure, simple way to save for emergencies and retirement

It’s your money — if you change jobs, your money and your account go with you.

You’re in control — you decide how much to save, when to withdraw money, how to invest, and what to do with your money when you retire. Or you can opt out.

BUT if you don’t want to make all those decisions, you still have savings to use for emergencies and retirement.

Maryland Launches Mandatory Retirement Program ‘MarylandSaves’ for Maryland Businesses

September 12, 2022

The MarylandSaves program, a mandatory state-sponsored retirement program, was created in 2016 under Maryland law to address the considerable number of people working within the state that had no retirement plan in place.

The MarylandSaves program, administered by Vestwell (not the state of Maryland), a subsidiary of BNY Mellon, boasts an easy setup and free facilitation to employers. The plan accounts are setup as a Roth IRA (Individual Retirement Account), an account that is contributed to after taxes, and is subject to all IRS rules related to Roth IRAs. While the program does not currently require (or even allow) employer contributions, that is expected to change.

With the MarylandSaves program’s official launch of September 6, 2022, Maryland registered businesses will begin receiving letters and emails from the state with access codes required for program registration. These codes will be sent any time from September 2022 through several quarters of 2023, so businesses are encouraged to watch out for their arrival.

Who is required to participate in the MarylandSaves program?

Employers that meet the following requirements:

• Employers with a ‘work location’ in Maryland, to include remote workers in Maryland
• Have been in operation for at least two calendar years
• Have at least one W-2 employee
• Use an automated payroll system

Employers meeting the above criteria are required to register with the program , regardless of whether they are exempt from creating a new retirement plan.

Am I exempt from the MarylandSaves program?

An employer is exempt from MarylandSaves if they do not meet the above eligibility requirements, or they already offer a qualified, employer-sponsored retirement plan . However, those employers seeking exemption based on an existing employer-sponsored retirement plan will still need to certify their exemption . This links to the SDAT (State Department of Assessments and Taxation) system and will affect business licensing.

Who is considered an eligible employee for the MarylandSaves program?

Any individual that is at least 18 years of age, working for a Maryland employer, regardless of status (full-time, part-time, seasonal, etc.) is eligible for this plan.

Next Steps for Businesses EXEMPT from MarylandSaves

• Watch for a letter or email from the state with your access code required for program registration.
• Certify your exemption .
• If filed by December 1, 2022, you will be eligible for a $300 credit on your 2023 personal property tax return (not for 2022), and every following year. Businesses must file the exemption form every year prior to December 1 in order to receive the SDAT annual report filing fee waiver for the following year’s MD personal property tax return.
• In 2023, the program removed the “company has no employees” checkbox from the exemption form, so companies can no longer request the fee waiver for companies with no employees.

Next Steps for Businesses NOT EXEMPT from MarylandSaves

• Determine whether to set up a MarylandSaves plan or another qualified retirement savings plan . If you choose to set up your own plan, and depending on the type of plan you select, you may need to act quickly. SIMPLE plans must be set up no later than October 1, 2022, to be effective for 2023. These are generally the most cost-effective option for small employers.
• Round up employee census information – items such as date of birth, that will allow you to setup the retirement plan for every individual.
• If you have chosen to create your own plan (outside of MarylandSaves), then you can certify your exemption . However, if you have not, you will need to register and use the program. A program onboarding video and online help center are both available on the MarylandSaves website.
• Notify your employees of impending changes and actions they can take. This step is critical. Resources such as auto-enrollment notifications, opt-out instructions, and other program fact sheets can be found on the MarylandSaves Program Resources page .
• If registered by December 1, 2022, you will be eligible for a $300 credit on your 2023 personal property tax return (not for 2022), and every following year. If using the MDSaves program, you do not need to file an exemption to claim the filing fee waiver; the MarylandSaves team will supply SDAT with your qualification information.
• Every time you run a payroll, you will need to submit contribution information for each individual to the MarylandSaves employer portal and make any updates to employee census information, including the addition of new employees.

I haven’t received my access code for MarylandSaves. What should I do?

• If a company has NOT heard from MarylandSaves, you can request your access code through the MarylandSaves website. On this page, enter the EIN (tax ID) for your company to receive the company’s access code via email.
• Once you’ve received this access code, you can proceed with the instructions above, either to file an exemption , or to register for the program .

What should employees know about the MarylandSaves program?

The most important detail to be aware of as an employee, is that if your employer creates a plan through MarylandSaves, you will automatically be signed up for this program with an immediate 5% contribution pulled from each paycheck (increasing by 1% each year until 10% is reached). Upon registration, the employee has 30 days to opt out via their individual portal ( or via downloadable form ). This must be done by the employee as the employer will not have access to make such a change.

For those employees opting to remain in the program, they will be charged a $30 administration fee per year, in addition to the amount contributed to their plan every paycheck. If a need should arise, the plan allows for a $1,000 withdrawal for emergencies without penalty to the individual.

It should be noted that if an employee is signed up for a MarylandSaves account through more than one employer, it is the responsibility of that employee to balance and manage contributions under the maximum deferral limits (the maximum allowed amount you can contribute from your paycheck to the account in one year). However, Vestwell will be merging the accounts into a single account per individual that will direct contributions into a single Roth IRA. See the IRS website for information regarding Roth IRA contribution limits .

Resources for employers and employees alike can be found on the MarylandSaves Program Resources page , in English and Spanish, at MarylandSaves.com .

Post updated 11.14.2 3

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Maryland Saves Program Effective For Tax Year 2023

November 14, 2022

In 2016, the Maryland legislature passed Senate Bill 1007 establishing the Maryland Small Business Retirement Savings Program (Maryland Saves Program). After many years of delays, the Maryland Saves Program is effective for tax year 2023. Under the terms of the program, substantially all businesses registered in the State of Maryland as of January 1, 2021 or earlier are impacted in one of the following ways:

Scenario 1 – The business has employees who receive an annual W-2 and does not currently offer any type of retirement plan.

Under the law, businesses in this scenario are required to either implement a retirement plan OR enroll in the Maryland Saves Program for tax year 2023. Under current law there is no penalty for noncompliance, however, the State of Maryland will waive the 2023 $300 annual report and personal property return filing fee for all businesses that enroll in the Maryland Saves program. If your business fits in this scenario, please reach out to your MSWS team member for further information and guidance.

Scenario 2 – The business has employees who receive an annual W-2 and currently offers a retirement plan to its employees.

Businesses in this scenario are required to certify their compliance with the Maryland law by virtue of the already existing retirement plan. The certification may be done via the Maryland Saves Program website using the following link:  https://www.marylandsaves.org/claim-exemption/

By certifying your compliance with the Maryland law your business will be eligible to receive a waiver of the 2023 $300 annual report and personal property return filing fee. Therefore, we recommend that all businesses under Scenario 2 complete the certification online as soon as possible.

Scenario 3 – The business does not have employees who receive an annual W-2.

Businesses in this scenario are required to certify their compliance with the Maryland law by virtue of not having employees who receive an annual W-2. The certification may be done via the Maryland Saves website using the following link:  https://www.marylandsaves.org/claim-exemption/  

By certifying your compliance with the Maryland law your business will be eligible to receive a waiver of the 2023 $300 annual report and personal property return filing fee. Therefore, we recommend that all businesses under Scenario 3 complete the certification online as soon as possible.

Please note, your business may have received (or may receive in the future) an access code from the Maryland Saves Program. The access code is used to enroll in the Maryland Saves Program, or to certify your exemption if applicable. An access code is not required to certify your exemption using the links above. If you would like to enroll your business in the Maryland Saves Program, and have not received an access code, you may request a code using the following link:  https://www.marylandsaves.org/register-my-business/

Lastly, attached to this memo please find the Maryland Saves Program Employer and Employee Fact Sheets, which provide more information about the program. Please review these to learn more about the program and as always, please contact us with any questions.

MD Saves Employer Fact Sheet (2 pages).pdf

MD Saves Employee Fact Sheet (2 pages).pdf

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Maryland Officially Launches State-Run Retirement Program

Businesses will only need to update employee and payroll information, while the program handles most of the administrative duties.

Maryland has officially opened its state-sponsored retirement program, providing individuals and small business owners with a new way to save for emergencies and retirement.

MarylandSaves, announced last year , is a state-sponsored program designed to make it easy for businesses to offer their employees a voluntary, automatic, low-cost and portable retirement and emergency savings plan.

The state says there are nearly a million employees working full-time without access to a retirement or emergency savings option. Under Maryland law, established businesses that use an automatic payroll system are required either to offer a retirement plan or to sign their employees up for the MarylandSaves program.

Businesses that enroll before December 1 will not have to pay the State of Maryland’s $300 annual report-filing fee for 2023, according to a press release from MarylandSaves. Employers will have no payment obligations, have no federal reporting requirements and will pay nothing to MarylandSaves for the service.

The program takes responsibility for most of the administrative duties. The press release notes that employers need to register their business, upload payroll and employee information into the system, and then keep staff lists up to date and submit their employees’ savings contributions.

The program is being administered by a team of providers including Vestwell and BNY Mellon, with investment options managed by BlackRock, Lincoln Financial Group, State Street Global Advisors and T. Rowe Price, the state announced.

MarylandSaves will offer workers in the state the opportunity to start a personal WorkLife Savings Account, or a Roth IRA funded automatically from payroll deductions, the release states. The accounts are under each individual saver’s control, with multiple investment options to choose from. Savers can decide at any time to change their savings rate, change their investment options or opt out entirely. They can also withdraw their money or take their account with them when they change jobs.

If a saver decides not to opt out, 5% of their paycheck will be automatically saved, the release states. The first $1,000 will be contributed to an emergency savings fund, and contributions beyond that will be invested in a target-date fund based on the age of the saver.

MarylandSaves is developing the ability in the future to enable participants to automatically convert their WorkLife Savings Accounts to a monthly paycheck when they are ready to retire, in an amount estimated but not guaranteed to last a saver’s lifetime, the release states.

The program is developing a feature to offer savers the option to withdraw money from their MarylandSaves account as they near retirement age to help them postpone filing for Social Security benefits; if a person defers and doesn’t file for Social Security at age 62, it increases their payment by approximately 8% each year until age 70. Using their WorkLife Savings Accounts to create a “Social Security bridge” could mean getting more Social Security payments when they do file, the release says.

The “Social Security bridge” and “managed payout” options are not expected to be available for several years, and the program will notify employers and participants if those options are adjusted.

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How to start a business in Maryland

Kristin Zaslavsky

Alana Rudder

“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.

Published 8:33 a.m. UTC Nov. 10, 2023

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Starting a business in Maryland is fairly easy but it can take more time for your documents to be processed than other states if you do not choose to expedite processing. Unlike other states, Maryland does not provide a comprehensive checklist for starting your business and instead strongly recommends you hire an attorney to help you form your business.

Ultimately, starting a new business in Maryland involves the following nine steps:

• Start with a business plan .
• Select a business entity .
• Choose a business name . 
• Choose your resident agent .
• Form your business .
• Apply for an employer identification number (EIN) .
• Apply for business licenses .
• Register your business for state taxes .
• Open a business bank account .

9 steps to register your business in California

1. start with a business plan.

Before you file your articles of incorporation or determine what type of business entity you’d like to create, you’ll want to create a business plan. Within the United States, the Small Business Administration (SBA) provides resources for creating your business, including guidance on creating a business plan . 

Your business plan can follow any format that works for you. However, it should cover some basics like how your business will operate, details on your goods or services and your funding and marketing plans. 

As a result, you may consider conducting market research to help you understand who is in your target market and how best to differentiate yourself from competitors. In addition, market research helps you understand your company’s value proposition. Your value prop is what your business brings to the market that others do not. That may be a unique product or providing access to a particular service closer to home for your customers. 

In addition, in this planning stage, consider the tools and software you will need to run your business. For example, you may need a: 

• Point-of-sale (POS) system . 
• Credit card reader . 
• Payroll software . 
• Task management system . 

2. Select a business entity 

After creating a business plan, you need to select your business entity type. A business entity type dictates how your business will be legally structured. Maryland recognizes four types of business entities:

• A sole proprietorship.
• A partnership.
• A corporation .
• A limited liability company (LLC) .

An LLC is a great option for businesses that are not looking to go public and want the management flexibility of a sole proprietorship. If you’d like the opportunity to be publicly traded at some point or are looking to raise capital easily, you may consider becoming a corporation. 

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3. Choose a business name

In Maryland, you’ll need to select a business name that is not already registered to another business in the state. It must also be marketable and not protected from national infringement. To learn how to choose an appropriate and legal business name, read our business naming guide . 

Once you’ve chosen a name, you can use the Maryland business name search tool to determine if the name you’d like is currently in use within Maryland. If it is in use, you must choose another one.

If you have the perfect business name but are not ready to register your business, you can reserve your business name in Maryland for 30 days for a $25 filing fee.

4. Choose your resident agent

Registered businesses in Maryland are required to have a named resident agent (or registered agent ). Your resident agent will be the primary person or entity responsible for receiving and managing legal and tax documents on your business’s behalf. A resident agent must be able to receive mail in the state of Maryland at the listed address during all regular business hours throughout the year.

Due to the strict and sometimes burdensome demands of this role, many small businesses opt to outsource it. You can do so using a registered agent from our list of best providers .

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5. Form your business

At this point, you are ready to file your business online with the state of Maryland. To do this, you’ll need to first register with Maryland business express online portal . Once you have registered, you can choose your business type, enter your name and follow the online prompts to complete all paperwork necessary for forming your business with the state. 

There are associated filing fees for each entity type. For example, to form a corporation, the filing fee is $120 and to form an LLC is $100. Fees are due at the time of filing your formation documents.

6. Apply for an EIN

To operate a business in Maryland, you’ll need an employer identification number (EIN) . This number is issued by the IRS to identify your business for tax purposes but is also used to open a business bank account, obtain business licenses, hire employees and other key business tasks. 

You can apply for one for free on the IRS website from Monday to Friday, 7 a.m. to 10 p.m. EST. You will receive an EIN instantly once you submit the application.

7. Apply for business licenses

In Maryland, a business license is required to operate most business types, including retailers and wholesalers. If you will be buying and reselling goods, for example, your business will require a trader’s license. To obtain all appropriate licenses for your business, you can use the Maryland OneStop portal to find and file for all licenses required for your business.

8. Register your business for state taxes

Most businesses in Maryland will need to register their business with the Maryland Comptroller’s Office to pay required taxes. For example, if you sell taxable goods or services in Maryland, you will need to pay sales and use tax. 

To register, you can fill out a combined application for all applicable tax types using the Maryland business express portal . 

9. Open a business bank account

At this point, it’s important to open a business checking account . Doing so allows you to keep business revenue and liabilities separate from your personal assets, thereby enhancing your limited liability protection. It also makes paying any employees, filing taxes and compiling annual reports easier. For similar reasons, you’ll likely want your business to have its own credit card or lines of credit to operate.

Find the best company formation services for Maryland: Best LLC services of 2023

Our top recommended company formation service for Maryland

Best llc service, rocket lawyer.

What you should know

Rocket Lawyer is a well-known, reputable company that offers online legal services to individuals and businesses. With a membership, you can access hundreds of customizable legal documents, attorney services, a proprietary document signing tool and discounts on professional services like tax filing and business incorporation.

If you purchase a new membership with Rocket Lawyer, you can snag a great deal on your LLC formation as it’s included for free. Without membership, the LLC formation service costs $99 plus state filing fees.

Read our full Rocket Lawyer review .

Pros and cons

• Free LLC formation for new members.
• Great customer reviews.
• Membership provides ongoing legal support.
• Customer support is lacking.
• Only one LLC service plan.
• Limited LLC plan add-ons.

More details

If you’re looking for a deal on an LLC organization, Rocket Lawyer is best for those who don’t yet have a membership and want an affordable way to get legal help on an ongoing basis. The large library of customizable legal documents makes it easy to DIY agreements and contracts, a directory of lawyers will be on-call if you need advice and the LLC formation will be free (plus state filing fees).

While starting a business in Maryland is not cost-prohibitive, its business fee schedule varies by business type. It costs:

• $0 to start a sole proprietorship or general partnership.
• $100 to begin an LLC.
• $120 to start a corporation that issues stock.
• $170 to form a corporation that does not issue stock.

Other fees and costs associated with starting a business in Maryland include: 

• Fees to hire a registered agent. 
• Fees to reserve a business name. 
• Costs to consult with a business attorney. 
• Filing fees to obtain necessary business licenses. 
• An initial deposit to open a business bank account.

While some of these fees are optional, others vary by provider. 

The length of time to start a business in Maryland depends heavily on whether you expedite processing. If you apply and expedite processing, the process takes a few hours, depending on how deep the state’s backlog is. 

If you do not expedite, filings submitted online will be reviewed during the second calendar month succeeding the month the filing was submitted. In other words, if you file in August, processing will not begin until October. Due to this, if your budget allows, it is well worth it to expedite the process.

If you’d like to understand how long expedited processing is taking when you file, you can check Maryland’s full list of document processing times .

Your principal office location must be in Maryland and cannot be a P.O. box.

Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.

Blueprint has an advertiser disclosure policy . The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.

As a former small business owner who has worked with organizations of all sizes, from mom-and-pop through Fortune 10, Kristin focuses on technology and financial solutions that work for your business and enable you to grow.

Alana is the deputy editor for USA Today Blueprint's small business team. She has served as a technology and marketing SME for countless businesses, from startups to leading tech firms — including Adobe and Workfusion. She has zealously shared her expertise with small businesses — including via Forbes Advisor and Fit Small Business — to help them compete for market share. She covers technologies pertaining to payroll and payment processing, online security, customer relationship management, accounting, human resources, marketing, project management, resource planning, customer data management and how small businesses can use process automation, AI and ML to more easily meet their goals. Alana has an MBA from Excelsior University.

How to start a small business: A step-by-step guide

Business Eric Rosenberg

Dying Broke

Facing Financial Ruin as Costs Soar for Elder Care

The United States has no coherent system for providing long-term care, leading many who are aging to struggle to stay independent or to rely on a patchwork of solutions.

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By Reed Abelson and Jordan Rau

Reed Abelson is a health care reporter for The Times and Jordan Rau is a reporter for KFF Health News. They interviewed dozens of families and experts for the Dying Broke series, a joint project on long-term care.

• Nov. 14, 2023

Margaret Newcomb, 69, a retired French teacher, is desperately trying to protect her retirement savings by caring for her 82-year-old husband, who has severe dementia, at home in Seattle. She used to fear his disease-induced paranoia, but now he’s so frail and confused that he wanders away with no idea of how to find his way home. He gets lost so often that she attaches a tag to his shoelace with her phone number.

Feylyn Lewis, 35, sacrificed a promising career as a research director in England to return home to Nashville after her mother had a debilitating stroke. They ran up $15,000 in medical and credit card debt while she took on the role of caretaker.

Sheila Littleton, 30, brought her grandfather with dementia to her family home in Houston, then spent months fruitlessly trying to place him in a nursing home with Medicaid coverage. She eventually abandoned him at a psychiatric hospital to force the system to act.

“That was terrible,” she said. “I had to do it.”

Millions of families are facing such daunting life choices — and potential financial ruin — as the escalating costs of in-home care, assisted-living facilities and nursing homes devour the savings and incomes of older Americans and their relatives.

“People are exposed to the possibility of depleting almost all their wealth,” said Richard W. Johnson, director of the program on retirement policy at the Urban Institute.

The prospect of dying broke looms as an imminent threat for the boomer generation, which vastly expanded the middle class and looked hopefully toward a comfortable retirement on the backbone of 401(k)s and pensions. Roughly 10,000 of them will turn 65 every day until 2030, expecting to live into their 80s and 90s as the price tag for long-term care explodes, outpacing inflation and reaching a half-trillion dollars a year, according to federal researchers.

The challenges will only grow. By 2050, the population of Americans 65 and older is projected to increase by more than 50 percent, to 86 million, according to census estimates. The number of people 85 or older will nearly triple to 19 million.

Those who needed long-term care were more likely to die broke

Among Americans who had $171,365 to $1.8 million in savings at age 65, those with greater long-term care needs were much more likely to deplete their savings than those who did not need long-term care.

The United States has no coherent system of long-term care, mostly a patchwork. The private market where a minuscule portion of families buy long-term care insurance has shriveled, reduced over years of giant rate hikes by insurers that had underestimated how much care people would actually use. Labor shortages have left families searching for workers willing to care for their elders in the home. And the cost of a spot in an assisted-living facility has soared to an unaffordable level for most middle-class Americans. They have to run out of money to qualify for nursing home care paid for by the government.

For an examination of the crisis in long-term care, The New York Times and KFF Health News interviewed families across the nation as they struggled to obtain care; examined companies that provide it; and analyzed data from the federally funded Health and Retirement Study, the most authoritative national survey of older people about their long-term care needs and financial resources.

About eight million people 65 and over reported that they had dementia or difficulty with basic daily tasks like bathing and feeding themselves — and nearly three million of them had no assistance at all, according to an analysis of the survey data. Most people relied on spouses, children, grandchildren or friends.

The United States devotes a smaller share of its gross domestic product to long-term care than do most other wealthy countries, including Britain, France, Canada, Germany, Sweden and Japan, according to the Organization for Economic Cooperation and Development. The United States lags its international peers in another way: It dedicates far less of its overall health spending toward long-term care.

“We just don’t value elders the way that other countries and other cultures do,” said Dr. Rachel M. Werner, the executive director of the Leonard Davis Institute of Health Economics at the University of Pennsylvania. “We don’t have a financing and insurance system for long-term care,” she said. “There isn’t the political will to spend that much money.”

Many older adults struggled with basic tasks

Almost 20 percent of those 65 and older reported having difficulty with one or more basic daily tasks. Of those, many were not receiving help.

Despite medical advances that have added years to the average life span and allowed people to survive decades more after getting cancer or suffering from heart disease or strokes, federal long-term care for older people has not fundamentally changed in the decades since President Lyndon Johnson signed Medicare and Medicaid into law in 1965. From 1960 to 2021, the number of Americans age 85 and older increased at more than six times the rate of the general population, according to census records.

Medicare, the federal health insurance program for Americans 65 and older, covers the costs of medical care, but generally pays for a home aide or a stay in a nursing home only for a limited time during a recovery from a surgery or a fall or for short-term rehabilitation.

Medicaid, the federal-state program, covers long-term care, usually in a nursing home, but only for the poor. Middle-class people must exhaust their assets to qualify, forcing them to sell much of their property and to empty their bank accounts. If they go into a nursing home, they are permitted to keep a pittance of their retirement income: $50 or less a month in a majority of states . And spouses can hold onto only a modest amount of income and assets , often leaving their children and grandchildren to shoulder some of the financial burden.

“You basically want people to destitute themselves and then you take everything else that they have,” said Gay Glenn, whose mother lived in a nursing home in Kansas until she died in October at age 96.

Her mother, Betty Mae Glenn, had to spend down her savings, paying the home more than $10,000 a month, until she qualified for Medicaid. Ms. Glenn, 61, relocated from Chicago to Topeka more than four years ago, moving into one of her mother’s two rental properties and overseeing her care and finances.

Under the state Medicaid program’s byzantine rules, she had to pay rent to her mother and that income went toward her mother’s care. Ms. Glenn sold the family’s house just before her mother’s death. Her lawyer told her the estate had to pay Medicaid back about $20,000 from the proceeds.

A play she wrote about her relationship with her mother, titled “If You See Panic in My Eyes,” was read this year at a theater festival.

At any given time, skilled nursing homes house roughly 630,000 older residents whose average age is about 77, according to recent estimates . A long-term resident’s care can easily cost more than $100,000 a year without Medicaid coverage at these institutions, which are supposed to provide round-the-clock nursing coverage.

Nine of 10 people said it would be impossible or very difficult to pay that much, according to a KFF public opinion poll conducted during the pandemic.

Efforts to create a national long-term care system have repeatedly collapsed. Democrats have argued that the federal government needs to take a much stronger hand in subsidizing care. The Biden administration sought to improve wages and working conditions for paid caregivers. But a $150 billion proposal in the Build Back Better Act for in-home and community-based services under Medicaid was dropped to lower the price tag of the final legislation.

“This is an issue that’s coming to the front door of members of Congress,” said Senator Bob Casey, Democrat of Pennsylvania and chairman of the Senate Special Committee on Aging. “No matter where you’re representing — if you’re representing a blue state or red state — families are not going to settle for just having one option,” he said, referring to nursing homes funded under Medicaid. “The federal government has got to do its part, which it hasn’t.”

But leading Republicans in Congress say the federal government cannot be expected to step in more than it already does. Americans need to save for when they will inevitably need care, said Senator Mike Braun of Indiana, the ranking Republican on the aging committee.

“So often people just think it’s just going to work out,” he said. “Too many people get to the point where they’re 65 and then say, ‘I don’t have that much there.’”

Private Companies’ Prices Keep Climbing

The boomer generation is jogging and cycling into retirement, equipped with hip and knee replacements that have slowed their aging. And they are loath to enter the institutional setting of a nursing home.

But they face major expenses for the in-between years: falling along a spectrum between good health and needing round-the-clock care in a nursing home.

That has led them to assisted-living centers run by for-profit companies and private equity funds enjoying robust profits in this growing market. Some 850,000 people age 65 or older now live in these facilities that are largely ineligible for federal funds and run the gamut, with some providing only basics like help getting dressed and taking medication and others offering luxury amenities like day trips, gourmet meals, yoga and spas.

The bills can be staggering.

Rising costs for long-term care

The median annual cost of all types of long-term care has risen faster than inflation over the last two decades.

Half of the nation’s assisted-living facilities cost at least $54,000 a year, according to Genworth, a long-term care insurer. That rises substantially in many metropolitan areas with lofty real estate prices. Specialized settings, like locked memory care units for those with dementia, can cost twice as much.

Home care is costly, too. Agencies charge about $27 an hour for a home health aide, according to Genworth. Hiring someone who spends six or seven hours a day cleaning and helping an older person get out of bed or take medications can add up to $60,000 a year.

As Americans live longer, the number who develop dementia, a condition of aging, has soared, as have their needs. Five million to seven million Americans over age 65 have dementia, and their ranks are projected to grow to nearly 12 million by 2040. The condition robs people of their memories, mars the ability to speak and understand, and can alter their personalities.

In Seattle, Margaret and Tim Newcomb sleep on separate floors of their two-story cottage, with Ms. Newcomb ever-mindful that her husband, who has dementia, can hallucinate and become aggressive if medication fails to tame his symptoms.

“The anger has diminished from the early days,” she said last year.

But earlier on, she had resorted to calling the police when he acted erratically.

“He was hating me and angry, and I didn’t feel safe,” she said.

She considered memory care units, but the least expensive option cost around $8,000 a month and some could reach nearly twice that amount. The couple’s monthly income, with his pension from Seattle City Light, the utility company, and their combined Social Security, is $6,000.

Placing her husband in such a place would have gutted the $500,000 they had saved before she retired from 35 years teaching art and French at a parochial school.

“I’ll let go of everything if I have to, but it’s a very unfair system,” she said. “If you didn’t see ahead or didn’t have the right type of job that provides for you, it’s tough luck.”

In the last year, medication has quelled Mr. Newcomb’s anger, but his health has also declined so much that he no longer poses a physical threat. Ms. Newcomb says she’s reconciled to caring for him as long as she can.

“When I see him sitting out on the porch and appreciating the sun coming on his face, it’s really sweet,” she said.

The financial threat posed by dementia also weighs heavily on adult children who have become guardians of aged parents and have watched their slow, expensive declines.

Claudia Morrell, 64, of Parkville, Md., estimated her mother, Regine Hayes, spent more than $1 million during the eight years she needed residential care for dementia. That was possible only because her mother had two pensions, one from her husband’s military service and another from his job at an insurance company, plus savings and Social Security.

Ms. Morrell paid legal fees required as her mother’s guardian, as well as $6,000 on a special bed so her mother wouldn’t fall out and more on private aides after she suffered repeated small strokes. Her mother died last December at age 87.

“I will never have those kinds of resources,” Ms. Morrell, an education consultant, said. “My children will never have those kinds of resources. We didn’t inherit enough or aren’t going to earn enough to have the quality of care she got. You certainly can’t live that way on Social Security.”

Women Bear the Burden of Care

For seven years, Annie Reid abandoned her life in Colorado to sleep in her childhood bedroom in Maryland, living out of her suitcase and caring for her mother, Frances Sampogna, who had dementia. “No one else in my family was able to do this,” she said.

“It just dawned on me, I have to actually unpack and live here,” Ms. Reid, 61, remembered thinking. “And how long? There’s no timeline on it.”

After Mrs. Sampogna died at the end of September 2022, her daughter returned to Colorado and started a furniture redesign business, a craft she taught herself in her mother’s basement. Ms. Reid recently had her knee replaced, something she could not do in Maryland because her insurance didn’t cover doctors there.

“It’s amazing how much time went by,” she said. “I’m so grateful to be back in my life again.”

Most people were cared for by family, not professionals

Partners and daughters were the most common caregivers for people who needed help with daily activities.

Studies are now calculating the toll of caregiving on children, especially women. The median lost wages for women providing intensive care for their mothers is $24,500 over two years, according to a study led by Norma Coe, an associate professor at the Perelman School of Medicine at the University of Pennsylvania.

Ms. Lewis moved back from England to Nashville to care for her mother, a former nurse who had a stroke that put her in a wheelchair.

“I was thrust back into a caregiving role full time,” she said. She gave up a post as a research director for a nonprofit organization. She is also tending to her 87-year-old grandfather, ill with prostate cancer and kidney disease.

Making up for lost income seems daunting while she continues to support her mother.

But she is regaining hope: She was promoted to assistant dean for student affairs at Vanderbilt School of Nursing and was recently married. She and her husband plan to stay in the same apartment with her mother until they can save enough to move into a larger place.

Government Solutions Are Elusive

Over the years, lawmakers in Congress and government officials have sought to ease the financial burdens on individuals, but little has been achieved.

The CLASS Act , part of the Obamacare legislation of 2010, was supposed to give people the option of paying into a long-term insurance program. It was repealed two years later amid compelling evidence that it would never be economically viable .

Two years ago, another proposal, called the WISH Act , outlined a long-term care trust fund, but it never gained traction.

On the home care front, the scarcity of workers has led to a flurry of attempts to improve wages and working conditions for paid caregivers. A provision in the Build Back Better Act to provide more funding for home care under Medicaid was not included in the final Inflation Reduction Act, a less costly version of the original bill that Democrats sought to pass last year.

The labor shortages are largely attributed to low wages for difficult work. In the Medicaid program, demand has clearly outstripped supply, according to a recent analysis . While the number of home aides in the Medicaid program has increased to 1.4 million in 2019 from 840,000 in 2008, the number of aides per 100 people who qualify for home or community care has declined nearly 12 percent.

In April, President Biden signed an executive order calling for changes to government programs that would improve conditions for workers and encourage initiatives that would relieve some of the burdens on families providing care.

Turning to Medicaid, a Shredded Safety Net

The only true safety net for many Americans is Medicaid, which represents, by far, the largest single source of funding for long-term care.

More than four of five middle-class people over 65 who need long-term care for five years or more will eventually enroll, according to an analysis for the federal government by the Urban Institute. Almost half of upper-middle-class couples with lifetime earnings of more than $4.75 million will also end up on Medicaid.

But gaps in Medicaid coverage leave many people without care. Under federal law, the program is obliged to offer nursing home care in every state. In-home care, which is not guaranteed, is provided under state waivers, and the number of participants is limited. Many states have long waiting lists, and it can be extremely difficult to find aides willing to work at the low-paying Medicaid rate.

Qualifying for a slot in a nursing home paid by Medicaid can be formidable, with many families spending thousands of dollars on lawyers and consultants to navigate state rules. Homes may be sold or couples may contemplate divorce to become eligible.

And recipients and their spouses may still have to contribute significant sums. After Stan Markowitz, a former history professor in Baltimore with Parkinson’s disease, and his wife, Dottye Burt, 78, exhausted their savings on his two-year stay in an assisted-living facility, he qualified for Medicaid and moved into a nursing home.

He was required to contribute $2,700 a month, which ate up 45 percent of the couple’s retirement income. Ms. Burt, who was a racial justice consultant for nonprofits, rented a modest apartment near the home, all she could afford on what was left of their income.

Mr. Markowitz died in September at age 86, easing the financial pressure on her. “I won’t be having to pay the nursing home,” she said.

Even finding a place willing to take someone can be a struggle. Harold Murray, Sheila Littleton’s grandfather, could no longer live safely in rural North Carolina because his worsening dementia led him to wander. She brought him to Houston in November 2020, then spent months trying to enroll him in the state’s Medicaid program so he could be in a locked unit at a nursing home.

She felt she was getting the runaround. Nursing home after nursing home told her there were no beds, or quibbled over when and how he would be eligible for a bed under Medicaid. In desperation, she left him at a psychiatric hospital so it would find him a spot.

“I had to refuse to take him back home,” she said. “They had no choice but to place him.”

He was finally approved for coverage in early 2022, at age 83.

A few months later, he died.

Reporting was contributed by Kirsten Noyes and Albert Sun, Holly K. Hacker of KFF Health News that is part of the organization formerly known as the Kaiser Family Foundation, and JoNel Aleccia, formerly of KFF Health News.

Reed Abelson covers the business of health care, focusing on health insurance and how financial incentives affect the delivery of medical care. She has been a reporter for The Times since 1995. More about Reed Abelson

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Money Talks News

The Average Retirement Income in 2023

Posted: November 12, 2023 | Last updated: November 12, 2023

Editor's Note: This story originally appeared on NewRetirement .

How are you going to pay for retirement? How is everyone else doing it?

What is the average retirement income for 2023? Has it changed a lot from past years as we put the pandemic behind us and the economy tries to figure out if things are going to get better or worse? Are you anywhere close to average?

Especially given today’s economy. The past year has held mixed financial results for different households.

The rise of inflation has been challenging, and the stock market has remained depressed.

Housing prices have gone lower, but not as low as people have expected, and they have risen in certain areas. As usual, the well off continue to get by just fine and those with fewer resources have struggled more to keep up with rising prices.

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Where Do You Stand Now?

Where do YOU stand now, and how does that impact your future retirement? Have you been able to keep up with your savings? How will that translate into retirement income?

Figuring out if you are going to have a secure future can be difficult. There are a lot of questions to answer and some things can be estimated by comparing yourself to averages.

However, there is no way YOU are average. When reviewing the numbers below, remember that your retirement security is based on hundreds of different factors.

The best way to plan and feel good about your future is by creating a detailed retirement plan.

Average Retirement Income and the Risk of Running Out of Money

The Boston College Center for Retirement Research publishes the National Retirement Risk Index ( NRRI ). It measures the share of American households that are at risk of being unable to maintain their pre-retirement standard of living in retirement.

The index is updated each year.

Most households don’t have enough

According to their 2023 analysis, the percentage of retirees who are at risk of not having enough is about 50%.

The most recent analysis uses data from 2019, but recent economic factors have been considered. Their conclusion?

“After recalculating the NRRI using the most updated methodology, the bottom line from our previous studies still holds: about half of today’s households will not have enough retirement income to maintain their pre-retirement standard of living, even if they work to age 65 and annuitize all their financial assets, including the receipts from a reverse mortgage on their homes.

“The robustness of the results confirms the retirement saving issue faced by today’s working-age households, and that we need to fix our retirement system so that employer plan coverage is universal. Only with continuous coverage will workers be able to accumulate adequate resources to maintain their standard of living in retirement”.

Read on to see the average projected retirement income numbers for 2023.

Related: 5 States Where Drivers Pay the Most for Car Insurance

Differences Between Mean and Median

The numbers you will review below represent median income. Median income is closer to the actual average for most households of retirement age. (Mean is the actual average.)

Here are the differences between mean and median.

Mean retirement income

Mean or average income is calculated by totaling each household’s income and then dividing by the number of households. This number can be very deceiving. Households earning the highest amounts of money will skew the data and make “average” incomes seem high.

In fact, mean (average) is particularly meaningless in 2023. Wealthy households are doing just fine. And, poor households have mostly simply held on or taken on more debt.

Median retirement income

Median income is determined by organizing all income amounts in order from low to high. The median income is the income in the exact middle of the list with half of the incomes being higher and half being lower.

Many statisticians think that median income is a more representative number.

Median is probably more representative now with increasingly divergent income levels.

What Is Median Income 2023 for All Ages?

Using data from 2021, the latest available, the median income for all ages in 2023 is $70,784. This represents only a very minor drop from 2020.

Average Retirement Income 2023 by Household Age: Income Falls as Households Get Older

The median income number above might seem “above average” — relatively healthy. However, the number doesn’t tell the whole story. Nor does it reflect the “retirement crisis” that is so often reported.

And, there is a reason. The number doesn’t show the reality of all retirees — especially those who are older.

Compare the median income and median post-tax income by age of household:

• Households Aged 45-54: $97,089, $85,444
• Households Aged 55-64: $75,842, $66,638
• Households Aged 65-74: $55,474, unknown
• Households Aged 75 and Older: $36,925, unknown

You see, for most people, retirement income falls dramatically as you age. The median household income for households older than 75 is under half that of the income for households ages 55-64 and significantly below the average for those 45-54.

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Much Worse Retirement Income for Single Female Households

Declining average retirement income as people age is not the worst of it!

The averages are more distressing for people who are single, especially women. The Pension Rights Center reports that “Half of all Americans age 65 or older have incomes of less than around $25,000 a year — far less than the amount that most need to meet their day-to-day living and health care expenses.”

The 2020 Census Data shows this for median and mean income for non-family (single) female households by age of household:

• Households Aged 65-69: $28,311, $39,945
• Households Aged 70-74: $26,558, $37,159
• Households Aged 75 and Older: $21,666, $32,233

Do Nationwide Averages Matter? What Is the Average Retirement Income in YOUR State?

Age matters when it comes to assessing average retirement income. Where you live is another big factor.

The national retirement income averages might be interesting, but not useful to you. After all, there are huge differences in the costs of living and income across different cities and regions in the United States.

• Highest-earning states: Maryland has the highest average household income at $94,789 followed by the District of Columbia, New Hampshire, New Jersey, and Utah.
• Lowest-earning states: The lowest average household income is found in Mississippi which at $45,134 is less than half that earned in Maryland. The other lowest income states are West Virginia, Arkansas, New Mexico, and Kentucky.

Compare Your Income to Others in Your ZIP Code

The Census Bureau will enable you to look up the average income and various other demographic data for your ZIP code. This may be a relevant measure to how you are doing compared to your peers, although it is really important to remember that all that matters is that you have sufficient income for you and your needs.

Using the Census Bureau Search: Find the search here . Plug in your own ZIP code (or in a ZIP code where you might relocate for retirement) and select the fact you would like. They offer “median household income.”

Where Does Most Retirement Income Come From €¦ and How Can You Boost Yours?

What follows are the top four sources of retirement income for most retirees and how to boost your income from each of them.

1. Average Social Security Income for 2023

The average monthly Social Security income got an 8.7% boost for 2023 due to rising inflation. This cost of living adjustment (COLA) raised the average monthly Social Security payment to $1,827 a month or approximately $22,000 a year.

NOTE: The average income for female households 75 and over is roughly equal to the average Social Security income.

Social Security was never intended to be a primary source of income. It was only ever intended to supplement retirement income. However, maximizing your payout can really add up over your lifetime!

Related: 10 Times You’re Right to Be a Cheapskate

How to increase your Social Security income

What is the best way to get more Social Security income? Here are two tips.

Postpone the start

Postpone collecting your benefits until at least full retirement age or longer (age 70) to get the maximum monthly payment. Delaying the start of Social Security can mean a BIG boost to your overall retirement wealth.

And, more and more retirees are getting the message. It used to be that the most popular age to start benefits was 62. However, now the most popular age for men to start benefits is 66 with 36% starting benefits at that age, followed closely by age 62 with 27% starting at this early age.

The most popular age for women to start is a tie. Thirty-one percent of women start at 62 and another 31% start at 66.

Plan for your spouse’s income, not just your own

If you are married, it is probably a good idea for the higher-earning spouse to defer the start of benefits for as long as possible. As you saw earlier, retirement income for people living on their own is extremely low.

You can help mitigate that problem with the right claiming strategy. Learn more about smart strategies for Social Security if you are married.

2. Average Retirement Income From Assets for 2023

According to the most recent Transamerica Retirement Survey , 50% of workers expect their primary source of income in retirement to come from self-funded savings such as 401(k)s, 403(b)s, IRAs (38%) or other savings and investments.

The expected reliance on retirement accounts (e.g., 401(k)s, 403(b)s, IRAs) is higher among workers of large and medium companies than those of small companies (45%, 39%, 29%, respectively).

And, the Pension Rights Center reports similar estimates. However, they have found that most older adults have little in savings. Only 66% receive income from financial assets. Half of those receive less than $1,754 a year.

Most people don’t have enough assets to meet their needs. The estimated median for baby boomers’ total retirement savings is inadequate to provide the income needed.

Transamerica reports that workers have saved $93,000 (estimated median) in total household retirement savings as of late 2020. Full-time workers have significantly more in retirement savings at $104,000, which is more than twice as much as the $48,000 part-time workers have saved (estimated medians).

Eighteen percent of workers have saved less than $10,000 in retirement accounts. Seven percent of workers report having $0 in retirement savings, including six percent of full-time workers and 12 percent of part-time workers.

How much retirement income does the average savings produce?

If you were to use a common (though flawed) rule of thumb to withdraw 4% each year — adjusting for inflation as you go along — then a savings of $164,000 (a value twice that of the averages cited above) would only produce about $6,560 in retirement income in your first year of retirement.

This is not enough for most households.

How to boost your income from savings

This is easy €¦ save more! Okay, maybe not so easy.

• If you are young, max out your 401(k) contributions and start an IRA. Keep up the contributions, and you’ll have a tidy sum when you retire.
• If you’re midway through your working years, it’s a little tougher. Be careful about what you spend on family in this phase of your life. Try to focus on making catch-up contributions.
• Retired or almost retired? Perhaps the best way to boost your retirement income from savings is to actually spend less or work longer! Your savings will last a lot longer if you are spending less (here are 20 ways to cut retirement costs ).

You may also want to explore the best way for you to turn your savings into retirement income. Or, explore using a bucket strategy. It maximizes the growth of some of your assets while minimizing risk on others.

Working with a financial adviser to identify opportunities to efficiently turn assets into income can be another good opportunity for you.

3. Average Retirement Income from Pensions

The Pension Rights Center has reported that 1 out of 3 older adults have retirement income from a pension. This number is trending further downward. Consider yourself extremely lucky if you have this income!

Very lucky in fact: Older adults who have pensions typically have at least twice the income of those living only on Social Security

The median annual pension benefit ranges between $9,262 for private pensions to $22,172 for a state or local pension, and $30,061 for a federal government pension and $24,592 for a railroad pension.

How to boost your pension income

You cannot exactly boost your pension payments. You can make sure that you are making the right choice between getting monthly payments or a lump sum.

Additionally, you should periodically check with your plan administrator about the health of the funds. Many pensions are underfunded.

If you are lucky enough to have a pension, be sure to use a retirement calculator with pension controls to accurately factor your pension into your overall plan!

4. Average Retirement Income From Work

Work after retirement could be an important part of retirement income.

Before the pandemic, the Bureau of Labor Statistics reported that increasing numbers of people over 65 and even over 75 would be remaining in the workforce.

However, as of the third quarter of 2021, 50.3% of U.S. adults 55 and older said they were out of the labor force due to retirement, according to a Pew Research Center analysis of the most recent official labor force data.

This indicates that fewer people are working after retirement age than in previous years.

In the third quarter of 2019, before the onset of the pandemic, 48.1% of those adults were retired. In regard to specific age groups, in the third quarter of 2021, 66.9% of 65- to 74-year-olds were retired, compared with 64.0% in the same quarter of 2019.

How to boost retirement work income

Delaying your retirement is the first option you might want to look at. Or, if you don’t already have a retirement job, you should consider one.

It doesn’t need to be a 9-to-5. It does not need to be high stress. In fact, you should look for work that you really enjoy doing and let the income be a bonus.

Any work income is going to be tremendously beneficial — both financially and for your intellectual and social well-being as well. Explore the benefits of work after retirement and the best jobs for retirees.

Also, have you considered passive income sources?

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