We’ve all heard it before: The best time to start saving for retirement was yesterday.
But many workers, particularly young, low-income and part-time workers, are more likely to not have a retirement plan through their jobs.
Nearly half of private sector employees ages 25 to 64 in Kentucky work for a company that does not offer a retirement plan. That’s approximately 566,780 people, according to a new report from the left-leaning Kentucky Center for Economic Policy.
“States are needing to step in,” says Ashley Spalding, research and policy associate at the center.
Spaulding authored the study, which recommends a state-sponsored plan that would automatically deduct savings out of a worker’s check.
Kentucky is one of the fastest-aging states in the country. And with pressing costs like housing, car repairs and school fees for kids, it can be difficult to put aside money to be used decades later.
“But once you set it up to be a payroll deduction, that really encourages saving,” Spalding says. She supports a plan that would enroll workers by default but offer a chance to opt out.
Some small businesses have trouble attracting or retaining employees because workers want benefits like an employer-sponsored retirement plan, Spalding says.
And she says poor seniors have an affect on the state budget.
“It’s expensive to provide the needed services for seniors living in poverty, and it really does fall on the state to do that,” she says.
More financially secure seniors means more people are able to spend and put more money into the economy. Being financially secure in retirement includes a mix of savings, Social Security and a retirement plan. Retirees in Kentucky receive an average of $1,243 in Social Security per month. For 35 percent of Kentuckians, it’s the only money they get in retirement.
California, Illinois, Oregon and Connecticut are among the states that have enacted state-sponsored retirement plans.
A bill proposed in Kentucky’s 2015 General Assembly would have offered payroll deduction plans to employees of private companies with at least five workers. The money would be invested in a Roth IRA.
The measure was not called up for a vote.