Several states helping workers set up retirement plans
CONNECTICUT -- If you’re on Social Security, you’ll be getting a raise next year of just three-tenths of one percent. That’s less than a buck a week -- likely to be wiped out by an increase in Medicare -- all this a reminder of how important it is to save for retirement.
Some states are trying to help.
Eighteen months ago, Marc Hoffman opened his first business, Strong Start, a child learning center in Trumbull, Connecticut. He does not offer a retirement plan for his 32 employees. While Hoffman wants to help his staff save, he simply doesn’t have the time or the expertise.
“There are so many things to do, that those type of benefits are not first and foremost. The number one priority with a new business,” he said.
More than 600,000 Connecticut workers do not have access to workplace retirement plans -- like a 401(k) or an IRA.
“These are folks who are going to enter retirement un or under-prepared and will likely have to turn back to their state or federal government for some level of assistance when and if they run out of money,” said state comptroller Kevin Lembo.
Connecticut and seven other states have recently passed legislation to help private sector workers get a retirement plan. Starting in 2018, Connecticut businesses with more than five employees that don’t already offer a retirement plan will be required to participate. Employees will be automatically enrolled at a 3 percent payroll deduction rate, but they can choose to opt out.
Research shows that employees are 15 times more likely to contribute to a savings program if it is offered through work than if they have to open an account on their own.
Retirement is a long way off for 27-year-old Bridget Bellitto-Douglas -- a teacher at Hoffman’s school, but she is interested in the new program.
“It’s simple. It’s easy. I don’t have to go to the bank, add more money,” she said. “Something I don’t have to think about.”
Save as much as you can, as early as you can.