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People work hard and deserve to retire with confidence - Support "Work and Save" legislation

People work hard and deserve to retire with confidence.

But today, a secure retirement is out of reach for thousands of Washingtonian who don’t have a way to save at work.

That’s why AARP Washington is advocating for the creation of a Small Business Retirement Marketplace – a new, commonsense solution that would help individuals and families save for retirement. The Small Business Retirement Marketplace would make it easier for small businesses to create retirement savings accounts for their employees. The accounts would be voluntary and portable, helping people take charge of their future and live independently and with dignity as they age.

The new legislation is based on last year’s STaRT bill (Save Toward a Retirement Today). AARP worked with the bill sponsors and changed the provisions so no new funding from the State will be requested. If they pass, the marketplace will be funded through private and federal grants.

Senate Bill 5826 will help small businesses offer retirement savings tools to employees.

  • SB 5826  would help Washingtonians build their own private retirement savings rather than depending on government programs.
  • Even very small levels of individual retirement savings by Washingtonians will save the State millions.
  • SB 5286 is a market-based approach providing small businesses with a simple and inexpensive way to offer private savings to their employees.
  • People save more when they have a workplace savings option.


Why now?

  • The age wave is here. By 2030 1 out of 5 Washingtonians will be 65 years or older.
  • 462,000 Washingtonians between ages 45-64 have less than $25,000 in savings.
  • The average monthly Social Security benefit in Washington is $1,300 per month. While Social Security is a critical piece of the puzzle, it is not enough savings to ensure people can live independently as they get older.
  • 77.4% of workers employed by businesses with fewer than 100 employees do not have a pension or retirement plan.
  • More than 38 million working-age households, or 45 percent, do not own any retirement account assets, whether in a pension plan, an employer-sponsored 401(k) or an IRA.                                              


“Work and Save” in other States

“Work and Save” is a well-researched national AARP campaign. Several states have pending legislation and dozens of others are considering similar employer-based small business retirement programs. Massachusetts, California and Oregon were the first to enact legislation. States expected to work on this topic in 2015 include, at a minimum: California, Washington, Connecticut, Illinois, Indiana, Maryland, Minnesota, Nebraska, West Virginia, and Wisconsin. Washington State’s program has broad support from a variety of aging, human services, business and labor groups in the state.

What are the details in Washington State?

What is the Washington Small Business Retirement Marketplace? The Small Business Retirement Marketplace (Work and Save in Washington State) makes it easier for Washingtonians to build their own private retirement savings rather than depending on government programs. This program takes a market-based approach so small businesses can offer a simple and inexpensive way to offer private savings to their employees. The result will be more people saving and being self-reliant throughout their lives.

Why is it important for Washingtonians? Baby boomers are woefully unprepared for retirement. In a recent AARP Washington survey, 25% reported that they had saved $25,000 or less. Nationally, only 66% of workers surveyed report having any retirement savings. The low savings rate puts individuals at risk of slipping into poverty when they retire and signals a greater reliance on state safety net services in the future.

What is the impact to the State? Encouraging people to save now will help Washington prepare for the age wave of the future. By 2030 nearly 20 percent of the state will be 65 years plus. The current publicly funded programs and infrastructure will not be able to handle the increased need for services and supports. The marketplace will be self-sustaining, and will be 100 percent participant funded after initial start-up costs. This is not a public pension, and the funds cannot add to the state’s pension liability.

Why are workplace savings programs important? People save more when they have a workplace savings option. The best way to encourage people to save is to provide them with an easy and automatic way to save at work, but as many as 75% of small businesses offer no type of retirement savings plans. More and more states are creating similar programs to make it easier and less expensive for small businesses to offer their employees savings options.

How is it good for employees? Most employees, unable to build up pensions and savings, risk living in poverty in their old age and becoming overly reliant on public assistance programs. This program offers employees access to an employment-based retirement plan and removes many of the deterrents like lack of knowledge and understanding about retirement saving. The account follows employees if they switch jobs so they can continue to save.

Why is it good for small businesses? Businesses offering retirement plans have a better ability to recruit and retain employees. The Washington Small Business Retirement Marketplace provides a simple and cost effective way for employers to offer an important employee benefit.

Not Making the Grade: 2013 Survey of Financial Decisions Among Washington State Adults Ages 45-64 by: Brittne Nelson, AARP Research & Strategic Analysis, from: AARP Research, April 2013

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