Social security alone is not enough, and was never meant to sustain Californians in their retirement. Yet despite their hard work, 43 percent of California's workforce is employed in jobs that offer neither a pension nor a retirement savings plan to supplement Social Security. This results in approximately 40% of baby boomers relying on their Social Security check - which averages just over $1,000 - for more than 90% of their retirement income.
Our program works to increase retirement savings opportunities through our research, writing and advocacy in two main areas: in support of the creation of universal, voluntary retirement accounts (UVRAs) available to everyone, and in support of automatic enrollment employer-based retirement accounts (Auto-IRAs).
Recently, President Obama called for an Automatic-IRA to ensure all Americans have access to a retirement account. Similar to the 2007 proposal, employees of businesses that have been operating for two years or more and have more than 10 employees but no retirement plan would have an IRA established when they begin work. Contributions will be initially set at a specific amount, likely 3 %, and will be automatically deducted from the worker’s paycheck to their new IRA. Workers have the freedom to “opt out” of the Auto-IRA. Details of the 2010 proposal are available on page 16 of the attached Treasury document (under Related Files).
In California, Assemblyman Kevin De Leon introduced similar legislation to allow California to pioneer these accounts. AB 125, of the current legislative session, would create an opportunity for California to blaze the trail and set the golden standard to develop an IRA product that eliminates the recruitment, start-up, and high administration fees for employers and employees. This new approach is good for workers and the hundreds of thousands of California small businesses who will have access to an easy, low-cost way to offer and build retirement savings.
Olivia Calderon recently presented at a national webinar on UVRAs, and her informative presentation is available here.
"Assets are important not only because they can be deployed productively or tapped to help individuals and families weather unexpected events, but because they have behavioral effects that can change the manner in which people think about and plan for the future." - The Assets Agenda