Colorado Workers Need a Secure Savings Plan

Retirement Security Working GroupBlog


For nearly half of the workers in Colorado’s private sector, saving for retirement doesn’t even feel like an option. The systemic barriers to saving are vast and far-reaching, especially for people who earn lower wages or work for small businesses, including high rates of people of color and younger workers. A lack of time, know-how, social constraints, and behavioral economics all compound to take control out of our hands and to make saving for retirement much harder than it has to be.

Surveys show that one of the biggest factors preventing workers from enrolling in plans is unfamiliarity with their options, even if their work does offer one. Assuming that people already have all the information they need to make an informed choice fails to account for equitable access to these decisions, other financial priorities, and mistrust of financial services providers, all of which result in different decision-making processes for each person.

As a result, when a person’s options are tied up in the obstacles of a larger system, finding solutions by yourself is nearly impossible. But what if there was a portable, universal and automatic program for any worker who isn’t offered a retirement plan at work that overcomes those systemic barriers? That’s what states like Oregon, California and Connecticut have recently established, with promising results.

The appeal is in their efficiency and simplicity for business owners who want to compete for great employees and workers who feel intimidated by the idea of setting up a savings plan. The plans are designed to help employers help their employees where normally there are barriers to both.

These plans automatically enroll anyone who isn’t offered one already at a certain percent of their salary. The account is tied to them, not their employer, so it goes with them if they change jobs. They get to choose if they want to save more, less or not at all.

When this option exists, workers take advantage of it. Of those eligible, 73 percent have enrolled in OregonSaves. Part of the reason is also the ease. Figuring out retirement is riddled with questions about who to trust, how to get started and what kind of investment product to buy, considerations that make the process daunting enough to put it off indefinitely. Programs like the one in Oregon and hopefully soon-to-be Colorado, make saving the easy thing to do, rather than a series of obstacles.

That’s why this session, a bill on retirement security is being introduced to help out not only businesses but also workers and ultimately all Coloradans. Colorado should have a universal, portable, automatic retirement plan so everyone can save, regardless of whether their employer can afford to offer a plan. The appeal of such a plan is in multiple aspects: mass participation would mean very low fees and a cohesive plan would ensure that everyone has an equitable opportunity to participate, no matter where you work. Businesses don’t have to offer plans they can’t afford and Colorado communities get the benefit of more financially secure retirees.

In Colorado, 45 percent of workers have no retirement savings plans offered through work. Small businesses strongly support having a new option to offer their employees. A comfortable retirement is every worker’s dream. But for this dream to be realized, we must eliminate the systemic obstacles. That’s why Colorado needs to pass the Secure Savings Plan.

By Rosemary Lytle, President of the NAACP Colorado, Wyoming, Montana State Conference