Senator Kearney’s Bill to Boost Savings Rate for Ohioans

Columbus – State Senator Eric H. Kearney (D-Cincinnati) delivered testimony today in the Senate Finance and Financial Institutions Committee for his legislation to boost the personal savings rate in Ohio. Senate Bill 194 would allow anyone filing an Ohio income tax return to have their refund deposited directly into a retirement savings account. Qualified accounts include 401(k) accounts, IRAs, annuities and Keogh plans.

“As the recession has hurt 401(k) values, it is more important than ever that we set aside a little extra for our future,” Senator Kearney said. “This bill makes saving for retirement easier than ever before.”

Economists estimate that a savings rate of 8-10 percent is a good range for long-term sustainability. In September, the national rate dipped to just three percent, a twelve-month low. During the worst period of the recession, the rate was as low as zero percent. There is an alarming trend in which families are dipping into retirement savings in order to pay bills and make ends meet. As families’ savings dwindle, their future financial vulnerability increases.

“Although many Ohioans have become more frugal as the economy has slowed, we must not ignore this opportunity to help ourselves prepare for retirement,” Senator Kearney said. “An increase in savings helps the Ohio and national economy. This legislation will help families withstand the challenges of future economic downturns.”

In addition to making it easier for Ohioans to save, the plan would also save money for the State. Compared with traditional paper checks, the State of Ohio saves approximately forty-cents for every refund issued via direct deposit. According to data from the Department of Taxation, this saved the State of Ohio over $500,000 last year alone.

“If just one in four taxpayers takes advantage of this program, more than $300 million would be deposited into retirement savings accounts statewide,” Senator Kearney added. “This would provide a significant boost to our state’s personal savings rate.”

Senator Eric H. Kearney represents parts of Cincinnati, St. Bernard, Elmwood Place, Cleves, Cheviot, Norwood, Golf Manor, Columbia Township, Deer Park, Silverton, Springfield Township, North Bend and Addyston.