For many workers, the economic outlook may be getting brighter, but confidence in their retirement prospects remains dim.
In the recent Putnam Lifetime Income Score survey, 65% of households expect the economy to grow in the coming year, while 60% lack confidence in being financially ready for retirement.
How can we boost confidence in a secure retirement? By renewing the commitment to effective workplace retirement plans. Research shows that people are more likely to save for retirement if they have access to a savings plan at work. But, according to a 2012 Bureau of Labor Statistics analysis, 32% of all working Americans do not have access to a retirement plan at work. Of the 68% of workers that do have a workplace plan, 54% participate.
Fortunately, we are seeing a growing momentum to expand access to workplace savings.
- The Automatic IRA Act, reintroduced this year by Rep. Richard Neal, would provide an automatic savings vehicle for all workers, unless they choose to opt out. Also, Neal’s proposed Retirement Plan Simplification and Enhancement Act would offer opportunities for businesses to start employees in the plan at higher contribution rates.
- In addition to the national discussion under way, some states are moving forward on this issue. Last year, the state of California approved a statewide retirement savings program for workers without access to a retirement plan at work. And this year, legislators in Oregon are considering a study to develop a similar retirement plan.
- And the public discussion is growing louder, with corporate leaders calling for solutions to the enormous challenges of financing America’s entitlement programs and facing up to our rising longevity.
Whether the action is national or local, the challenges facing today’s workers trying to save for retirement are the same. There will undoubtedly be many proposals, but the goal is a singular one: to expand workplace savings and help workers become better prepared for retirement. In my view, this is quite achievable, especially with continued dialogue around forward-looking ideas and innovation.