President Barack Obama’s proposal to offer federally run retirement accounts to workers who don’t have access to them will be watched closely by states contemplating similar solutions.
Oregon in particular has a large number of small businesses and startups that do not offer retirement plans to employees. That has prompted State Treasurer Ted Wheeler to push in 2013 for the creation of a task force that will explore and recommend new ways to help Oregonians save for a more secure retirement. The task force, which will begin meeting this year, will include consumer advocates and representatives from the financial sector.
In his State of the Union address Tuesday night, Obama announced a new savings program, "MyRA," for workers whose employers do not offer a retirement plan. MyRA would guarantee a “decent return” without risk of losing what the employee initially invests, said Obama, who signed an executive order Wednesday directing the Department of Treasury to create the program. The details are forthcoming but the plan would essentially be a savings bond program aimed at helping the middle-class invest part of their paychecks in retirement.
“A Social Security check often isn’t enough on its own,” Obama said. “And while the stock market has doubled over the last five years, that doesn’t help folks who don’t have 401(k)s.”
A spokesman for Wheeler called Obama’s proposal “an exciting development.” According to a 2013 survey by AARP Oregon, more than half Oregonians between the ages of 45 and 64 do not have retirement savings through an employer, and one in six Oregonians has less than $5,000 in retirement savings.
“The task force would absolutely take a look the MyRA as part of the goal to increase retirement savings options,” James Sink said in an email Wednesday. “When it comes to increasing retirement security for Americans, more options are better than less.”
Additionally, MyRA could be automatically offered to workers as statistics show participation tends to be greater when members have to opt out of something instead of opting in. However adding that feature to the program would have to be approved by Congress.
According to the Center for Retirement Research at Boston College, 53 percent of American households are “at risk” of not having saved enough to maintain their living standards.
Last month at the National Association of State Treasurers Issues Conference in New York City, Wheeler headed up a roundtable to discuss retirement security options. In addition to investment firms and labor unions, participants also included treasurers or deputy treasurers from 18 states and the District of Columbia.