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James A. Diossa is Rhode Island General Treasurer. Sean Scanlon is Connecticut Comptroller.
Currently, nearly 200,000 workers in Rhode Island do not have access to an employer-sponsored retirement savings program. That needs to change. The Secure Choice Act, sponsored by Sen. Meghan Kallman and Rep. Evan Shanley, provides more Rhode Islanders with the opportunity to save for their future. It would offer a state-administered Individual Retirement Account to private sector employees working in smaller businesses.
According to AARP, about 40 percent of Rhode Island private sector workers ages 18 to 64 in 2020 were employed by businesses that do not offer any type of retirement plan. As with employer-sponsored retirement savings programs, contributions can be easily and automatically deducted from employees’ paychecks. Employees can choose to opt out of the program if they do not want to participate. Additionally, the program would be portable, meaning an employee’s retirement savings plan follows them as they pursue new opportunities. Only businesses that do not already provide retirement savings plans for their employees would need to participate. Besides the benefits to workers that Secure Choice affords, the program would not require employer contributions.
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Facing a similar challenge, Connecticut implemented MyCTSavings, a similar program that has found tremendous success and acceptance from both employers and employees. Workers throughout Connecticut can now confidently plan and save for their futures, without employers bearing burdensome costs or administrative responsibilities.
Employees in Connecticut report feeling empowered by the ability to save for retirement. Business owners note how the program has helped attract and retain talent, as workers now have a retirement benefit that businesses might not otherwise have been able to afford. Some employers have even reported that having MyCTSavings as a no-cost option led them to increase employee wages. In states like Rhode Island and Connecticut, where economies depend heavily on mainstream and small businesses, programs like MyCTSavings and Secure Choice allow those businesses to stay competitive with larger organizations that have the ability to offer a more robust benefits package.
Eleven other states across the country have passed a state-run retirement savings program for private businesses similar to that proposed in Rhode Island.
We face a looming retirement cliff with a large portion of our population nearing retirement age. Currently 40 percent of older Americans rely solely on Social Security, which leaves them with little more than poverty-level income. The Secure Choice Act would create an infrastructure that encourages people to save for retirement. Secure Choice would save taxpayer money in the long run by allowing workers to save money themselves for the future and rely less heavily on state welfare benefits. If there is no action like Secure Choice on retirement savings, the state will have a heightened burden when we reach that retirement cliff.
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For example, a 30-year-old worker with an annual salary of $50,000 could amass $250,000 in additional savings by the time they are 65 simply by putting away 3 percent of each paycheck. Too many Rhode Islanders work day and night without the assurance of a solid financial future. With Secure Choice they have the chance to rectify that.
The General Assembly should act to pass Secure Choice and Rhode Islanders who support it should encourage their legislators to do so as well. As we have seen in states like Connecticut that already have similar programs, the benefits of acting outweigh those of sitting idle. Secure Choice is an invaluable opportunity to lend a helping hand to the working families of Rhode Island and make an important investment in the state’s future.
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