Auto-enrollment may be just what Americans need to save more for retirement—but perhaps only if the government makes it a requirement, MarketWatch reports.
Only half of Americans participate in a workplace retirement plan, a staggering statistic considering how much of the responsibility for funding an adequate retirement now falls on individuals.
Without the financial education, encouragement or access, retirement savings isn’t always a top priority. That’s where automatic enrollment comes in: It’s one way to get Americans to stash money into a retirement account without thinking about it. With auto-enrollment, companies can sign up their new employees into their retirement savings programs, beginning with deferring a small percentage of their salaries, so that at the end of their careers their workers will have some sort of a nest egg waiting.
Congress members have included this key provision in the Secure Act 2.0, the latest legislative proposal aimed at fixing retirement security for all Americans.
“It would require employers to auto-enroll workers into the plan so that workers wouldn’t be deterred by inertia,” says Richard Johnson, director of the program on retirement policy at the Urban Institute. The proposal also addresses auto-escalation, which automatically increases employees’ contributions to their accounts every year. As it stands, the proposal states participants must begin with a deferral of at least 3% and no more than 10%, with an annual increase of one percentage point for every year (up until the maximum 10%). “Requiring all plans to increase the share of contributions into retirement plans would make it much easier to accumulate enough money to live securely.” Read the full story.
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March 18, 2021 at 05:01PM
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Congressional proposal would require employees to save for retirement - Greater Baton Rouge Business Report
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