California is known for setting trends. However, there is one trend that Californians would like to distance themselves from…that is, residents of the state are ill-prepared for retirement. Perhaps not a California-inspired trend, but the lawmakers from the state see the problem and are responding with a program called Secure Choice.
The bottom line, a lot of Californians (and many Americans) are not saving enough for retirement. Nearly half of workers 50 and older have less than $25,000 in savings and more than 40 percent of those within 10 years of retirement age have no retirement savings at all.
California state law makers are working to provide solutions for this retirement shortfall.
California’s proposed Secure Choice retirement plan is a proposed state-run plan that will allow workers whose employers do not offer a retirement plan to participate in a 401k plan. It’s essentially a 401k operated by the state for employees of small business. The plan will automatically opt-in about a third of California’s workforce, those at companies with more than five workers without employer-sponsored 401ks.
“But critics cite concerns that too many people will chose to opt-out, risking everyone’s investment potentially leaving taxpayers on the hook. Critics say Secure Choice participants will include younger and part time workers, many making less than 25,000 a year, who are more likely to opt out when every penny counts.”
Proponents of the program, like the AARP, say 7.5 million people currently have no 401k option.
They say, even if 2 million participated, it would keep fees low and cover costs.
The legislation goes up for a vote in the assembly next week. It’s already passed in the state senate.
