RetirementAccountAn estimated 2.5 million Illinois workers do not have access to an employer-based retirement plan. With Americans living longer and longer and the total cost of retirement increasing every year, many workers – particularly low-wage workers – are on track to not have enough resources to live on once they reach their golden years. 

Acknowledging this reality, Illinois passed a law late last year that will help millions of workers prepare for retirement.

The law – the first of its kind nationwide – creates the Secure Choice Savings Program, which will automatically enroll workers without available employer-based plans in a state-based Roth IRA plan.

The plan will deduct 3 percent of workers’ wages with the option of increasing or decreasing the deduction or opting out of the program completely. Businesses with twenty-five or more employees will be responsible for offering the plan, but neither employers nor the government will contribute or act as a fiduciary of the funds.

Proposals to help workers prepare for retirement have sprung up in other states as well, with California and Oregon recently passing laws creating similar state-based retirement plans. President Obama included the issue in his “economic security platform,” and while Congress has been unable to pass legislation at the federal level, the administration recently released guidelines for states wishing to implement their own plan.

Illinois’ Secure Choice Savings Program goes into effect in 2017.

Read more about state-based retirement plans (New York Times)

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