Maybe you’re young enough not to be too concerned about it.
Or maybe you’re getting to that age where you’re starting to worry a little.
Or maybe you’re in a full-blown panic.
If you haven’t been saving for retirement, you’ve got a limited number of choices: You can either keep working forever, plan to live in poverty, have your kids support you, or start saving now before it’s too late.
If your employer doesn’t have a retirement savings plan set up for you – a pension or a 401(k) or something similar – your options are even more limited.
That’s why it’s important that Gov. Andrew Cuomo quickly sign into law a bill that would require employees of certain companies to be automatically enrolled in a new state-administered retirement savings plan.
The New York Secure Choice Savings Program, which was included in the 2018/2019 state budget but has yet to be fully implemented, requires employers with at least 10 employees, in business for at least two years and that don’t offer a “qualified retirement plan” to participate in the program.
Participating employers are compelled under the original law simply to distribute information about the program to employees and to collect and send in payroll deductions to the state. Companies are not forced to administer the program or pay out any money for it.
The bill that passed with overwhelming bipartisan support in June (A3213A/S5395A) would automatically enroll employees in the program unless they opt out.
Employee contributions are set at a 3% default rate, but eligible employees can select a different rate. Contributions are capped at the federal IRA limits, and the program will use only Roth IRAs.
Automatic enrollment would boost enrollment in the program and potentially help more than 2.5 million private-sector New Yorker employees aged 18-64 start to build a nest egg for their post-work years.
Studies find that employees tend not to participate in retirement savings programs unless they’re compelled, hurting themselves and their families in the long-term.
Enrollment jumps from about 70% to 90% participation with automatic enrollment. Those groups least likely to participate unless automatically enrolled are young people, low-income workers and minority groups.
So it’s vital the state get all eligible employees signed up and contributing.
The legislation has the support of AARP New York and two dozen other organizations that signed a letter to the governor late last month urging him to sign the bill.
The governor should waste no more time in making this bill the law.