Three in four Americans say they would participate in a state-facilitated retirement program it was offered according to a new survey from the National Institute on Retirement Security.
The national survey, contained in a new issue brief from NIRS called Americans’ Views of State-Facilitated Retirement Programs, finds strong support for new state-based programs aimed at helping workers without employer-provided plans.
The survey found the vast majority of Americans (72%) agree that state-facilitated retirement savings programs are a good idea, with high support across party and generational lines (with support highest among Millennials at 78%). Most express favorable views of features like portability (84%) and low fees (82%).
“It’s encouraging that many states are taking action to help employees save for retirement, and it’s equally promising to see strong public support for these new retirement programs,” said Dan Doonan, NIRS executive director and report co-author. “At the same time, it’s important to note that the state-facilitated programs are a backstop for employees who lack workplace plans like pensions and 401k accounts.”
Ideally, the state-facilitated programs will nudge more employers to offer retirement plans to their employees, Doonan added. “Employer-sponsored retirement plans have advantages that are not available to state-facilitated plans, including employer contributions. In fact, research indicates that more employers in states like California, Oregon, and Illinois are moving toward plan sponsorship in response to the new state-facilitated programs,” Doonan said.
These results come as most working Americans are not on track for a secure retirement. Half of U.S. households will not have enough retirement income to maintain their standard of living in retirement. The causes of the retirement savings crisis are many, including fewer pensions, lower Social Security income, and the rising costs of housing, healthcare, and long-term care.
To help Americans lacking retirement plans at their workplace, many states have taken action, establishing state-facilitated retirement savings programs.
Since 2012, some 46 states have either enacted, studied, or considered legislation that would establish state-facilitated retirement programs, according to Georgetown University’s Center for Retirement Initiatives. Currently, 14 states and two cities (Seattle and New York City) have enacted these new programs for private sector workers.
While each program is different, the most popular type of program that states are enacting automatically enrolls workers in moderate risk, low-cost retirement savings accounts referred to as auto-IRAs. Typically, the state-facilitated programs require private sector employers lacking retirement plans to provide their employees with access to retirement accounts through payroll deductions. These programs are overseen and administered by the state, while investments are managed by private companies. Workers in states that offer these programs can access these retirement savings accounts when they retire.
Download the research here.
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• Colorado, New Mexico First to Partner on State-Run IRA Program