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The state and federal governments could save at least $194 million over a 15-year period if the people least prepared for retirement increase the amount they save by 10 percent, according to a study commissioned by AARP Utah.

Conducted by a Provo-based company called Notalys, the study determined that 18 percent of Utahns who retire in the next decade and a half will have more debt than savings, which will require them to turn to the government to make ends meet.

Since 73 percent of government outlays go to the poorest third of that group, said the study led by Sven Wilson and Jay Goodliffe, taxpayers could see significant savings if those lower-income people can be encouraged early on to start setting aside more money for retirement.

"If all goes well, this is the minimum cost for the state," Goodliffe said of the $194 million expense. "But it could be much worse."

AARP Utah commissioned the study, said state director Alan Ormsby, to quantify the range of costs facing future taxpayers as Baby Boomers move into retirement in greater numbers. The study recognized that a sizable number will have insufficient savings to support themselves for the rest of their lives and will have to turn for help to six government aid programs, most notably Medicaid and food stamps (officially known as SNAP, or Supplemental Nutritional Assistance Program).

Wilson, who is also a professor of public policy at Brigham Young University, said that even though Utah is the country's youngest state, "it is aging and it is aging rapidly." While 12.9 percent of the state's population was 60 years and older in 2012, the figure will be 14.5 percent in 2020 and 16.7 percent in 2030.

This population increase coincides with a fundamental change in the way many retirements are funded. In a bygone age, Wilson said, people worked for years at one company, which provided a pension that the employee paid into — along with supplemental funds from Social Security.

But people change jobs more now and many companies have scaled back or eliminated pension plans. Individuals had to be more self-reliant in shaping their futures.

"This gives people more control," he said, "but more fall through the cracks who don't plan properly."

Wilson said more studies should be done looking into the best ways for the state to "nudge" these people toward putting aside more money.

One possibility would be to encourage companies that have 401k or other retirement plans to set them up so that employees, unless they specifically opt out, automatically set aside money from each paycheck. The dominant approach now requires employees to opt in, he said, an unfamiliar process that scares many employees away.

State Treasurer Richard Ellis applauded AARP's help in accumulating figures showing how small increases in workers' savings can reduce government spending.

"In the next year we'll define programs we can support to encourage the private sector to get involved so we don't have a crisis," Ellis said. —

Cost of retiring poor

As Baby Boomers hit retirement age in the next 15 years, an AARP study has found that:

An additional 457,000 Utahns will reach retirement age

18 percent will retire with more debt than assets

73 percent of government outlays go to one-third of the retiring population

Increasing the net worth of the bottom one-third of retirees by just 10 percent over the worker's career — an estimated $14,400 — will reduce reliance on government plans by at least $194 million.

Source: AARP/Notalys LLC