Half of America’s Workforce has No Retirement Plan—But Illinois has a Fix

[eridani]

Dean Baker likes this.

http://www.nationofchange.org/news/2016/01/24/half-of-americas-workforce-has-no-retirement-plan-but-illinois-has-a-fix/

The plan, called the Illinois Secure Choice Savings Program, will automatically enroll workers and will deduct an adjustable percentage per paycheck to set aside in an individual retirement account.

While workers will have the ability to opt out of the plan, all businesses within the state that have existed for at least two years and employ 25 people or more will be required to participate if they currently offer no savings plan. Should businesses not comply, they will be fined $250 per unenrolled employee.

“This is a really good idea,” says Dean Baker, an economist with the Center for Economic and Policy Research. “Half of America’s workforce has no retirement plan whatsoever. I know the argument is that everyone should invest in an IRA, but this is the real world, and everyone doesn’t.”

The primary reason, Baker says, is that most people who don’t invest in retirement plans can’t afford to. Not only do they have little disposable income, but retirement accounts can involve service fees of up to 3 percent.

The percentage might sound small, but extended over the course of a career, it can add up to tens of thousands of dollars.

[Liberal_in_LA]

1. Kinda like a state social security? Does the "no retirement" include soc sec?

[eridani]

2. No, just personal savings. Far more people rely only on Social Security--

--than was originally anticipated.

[daleanime]

3. Simpler and better...

just to expand Social Security. This would help people immediately, not just 20 years down the road.

[eridani]

4. That, too. The reality is that we need savings as well as Social Security

[Hortensis]

8. Agree SS + personal investment accounts is

what's needed. Daleanime, very unlike SS, the money a person puts in and the returns on those years of investment will belong to that person. Nothing to do with Congress.

It's a shame more people don't just do this on their own, but at least these investments should be somewhat safer, despite the caveats in the article.

[Warpy]

5. It sounds good but wages need to be above subsistence for it to work

Since it's going into an IRA, I imagine it's portable.

[Sherman A1]

6. Precisely

That said, this is at the very least a plan and one that for too long has been sorely lacking.

[hobbit709]

7. Depending on how much the worker is getting paid it might work.

$8/hr might mean even if they take out only 1% it may mean skipping a meal or two every pay period.

[AngryAmish]

9. Never give Illinois politicians anything.

They will steal it.

[ProfessorGAC]

11. ^^^This^^^

Exactly my concern. This could turn out to be another "earmark" that ends up being part of the general revenue fund. Just like the IL lotto. Didn't really set it aside for education, because they cut other funding for education to offset the lotto money. Essentially, the lotto money just became a fraction of the general revenue.

[elias49]

10. So employers set up savings accts for their employees?

WTH? Do the businesses contribute a percentage to that savings acct'? Is that money invested?
Sounds pretty..well, what's the point?

[Orrex]

12. In addition to the half that has no retirement plan at all...

I'll bet that a sizable percentage has a grossly inadequate retirement plan, so that the effect will be the same for them just a few years after they leave the workforce.

[HughBeaumont]

13. "Want to retire? Make More money!!"

"Supersize yer skillset! Pull yerselves uppen by yer bootstraps, by cracky!"

Grateful Americans wonder why they never thought of that.