With Republicans threatening to cut Social Security benefits, retirement savings has become a national issue. Some states (not anti-employee Florida, of course) have tackled this issue by implementing retirement plans for private-sector employees.
The latest state to implement a private-sector retirement plan is Connecticut. They join California, Illinois, Maryland and Oregon in implementing automatic-enrollment IRAs. These are state-facilitated programs that private financial firms administer. Participants are automatically enrolled and pick the percentage of their pay they want to put into the plan from each check. Absent an election, there is a set amount put away.
New Jersey and Washington State have created online marketplaces listing plans administered by private firms that meet minimum standards.
Massachusetts and Vermont have implemented multiple-employer group 401(k) plans available to eligible employers. In Massachusetts, that means only small nonprofits.
These plans will be lifesavers for the many employees who don't have an employer pension plan. As an example, OregonSaves, the first of these plans, has collected more than $7.6 million in contributions in over 19,000 accounts, a number that increases about $200,000 per week, according to estimates by Oregon’s state treasurer.
Half of private-sector employees have no retirement plan, and many have little or no retirement savings. A third of Americans have less than $5000 saved, 20% have no savings, and a third of baby boomers who are retired or about to retire have zero to $25,000 in retirement savings. We as taxpayers will bear the burden of caring for these retirees, so it makes financial sense for states to step in.
It's time for states to step in where the federal government is about to fumble badly. Let's make sure working people who retire can live comfortably.
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