Next Avenue: More states are offering auto-enrollment retirement plans, and they seem to be working

by | Oct 23, 2023 | Stock Market

This article is reprinted by permission from Given that 57 million Americans work for employers that don’t offer a retirement savings plan, it’s no wonder that by 2035, roughly 20 million retirees may be living in poverty, according to the National Institute for Retirement Security.

For workers without access to employer-sponsored retirement programs, many states are stepping in to encourage workers to start saving. “When we look at the workforce today, we have half of our private sector workers who go to work every day, and they don’t have access to a way to save for retirement,” said Angela Antonelli, executive director of Georgetown University’s Center for Retirement Initiatives, which has urged policy makers to adopt state-sponsored retirement savings programs since 2014.States encourage savings Programs like Illinois Secure Choice work with businesses that don’t offer retirement savings plans, such as a 401(k) or pension, to deduct after-tax cash from each paycheck to set aside in a Roth IRA. Auto-enrollment retirement savings programs automatically sign up employees but give workers the option to opt out if they choose. Participants can contribute up to 10% of their wages to savings. When Illinois rolled out its program in 2018, it only required employers with 500 or more employees to participate, but by November, companies employing as few as five workers will be required to adopt the plan. Illinois is not alone in creating mandatory savings programs for its workers. To date, 19 states have adopted retirement savings programs with m …

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