Life has a bad habit of getting in the way of our carefully laid-out plans, no matter how hard we work to achieve a financially-secure retirement. And as traditional pension offerings have declined in popularity, more and more workers have found themselves struggling just to pay the bills in retirement. Clearly, our workforce needs a little bit of help—and states are stepping in.
By the end of this year, most small employers in the state of Illinois will be required to offer employees a retirement savings program to save in—an attempt from the state government to protect its citizenry from reaching retirement age without having adequate savings to get them to and through retirement. But is Illinois Secure Choice actually mandatory, and if so, how will small employers potentially be affected?
Oregon has introduced legislation to help close the coverage gap among retirement savers, mandating that small businesses and large business alike provide employees with retirement plan to save in. Employers who don’t already offer a retirement plan to employees will be required to either adopt a qualified plan or register to offer Oregon’s new state-run retirement program, OregonSaves.
The results from recent studies surrounding retirement readiness are in, and they don’t look good. More than 1 in 4 U.S. adults don’t save any portion of their household’s annual income for retirement; taking a cue from this statistic, and understanding that everyone benefits from making savings a priority, these states are proactively investing in the economic futures of their citizenry by introducing laws that provide state-run retirement savings initiatives.
There’s been a lot of talk recently about how many American workers lack access to an employer-sponsored retirement plan, and the statistics are alarming. According to the Employee Benefits Research Institute, only about three in ten small businesses have retirement savings plans available to employees. The problem here is obvious—so the government is stepping in.
Social Security, which was designed to only replace a portion of workers’ pre-retirement earnings, provides most of the retirement income for an alarmingly high amount of households aged 65 and older in the United States – about half. Potentially even more distressing is that more than a third of American’s don’t have anything saved for retirement, and something needs to be done about it.
For those still working, access to employer-sponsored retirement savings plans can help set workers on the path towards retirement readiness, but recent statistics show that 34 percent of working adults don’t have any retirement savings. Unless there’s a drastic change, this leaves millions of retiring Americans relying solely on their Social Security income or taxpayer-funded public assistance. Enter state-auto IRAs.