New Yorkers Could Have New Way to Save for Retirement in State Budget
New Yorkers might have a new way to save for their future, if their workplace doesn’t offer a retirement plan now. AARP and other groups are confident a proposal called Secure Choice will make it into law this year. Legislative Director Bill Ferris said lots of people do not have an easy way to set aside a portion of their income.
“Well this mechanism is very important to have because the payroll is the key to savings, and people are 15 times more likely to save for retirement when they can do it at their workplace,” said Ferris. “We’ve known from our research and looking at census data that well over half the people who go to work every day have no way to save at the workplace.”
Secure Choice would be offered through employers, with the funds being managed and invested by the state.
“Well first if you’re a small business that offers no way to save, it’s voluntary if you want to be involved in this program. It’s simply that business connecting their employees to an individual retirement account. And all that really takes is for them to have the money deducted from that individual and then invest or get a contractor to invest that money,” said Ferris.
Not everyone is in favor of the saving proposal. Wealth Adviser Daniel Jeffery with Best Times Financial admitted savings rates are low. But he believes there are other methods already in place, without another state program.
“Personally and professionally, as a small business owner, I don’t want any more government mandates on me. I’m not confident that another state mandated program is going to solve the savings issue,” said Jeffery.
Jeffery adds that in addition to a financial adviser, people have other services that can help them develop a retirement plan. Peple can use free services such as FoundationforFinanicalPlanning.org , a pro-bono resource, and FeedthePig.org, as well as simple automatic deductions at a bank or credit union.
AARP emphasizes the Secure Choice plan would be voluntary for businesses and employees. A version of Secure choice is included in budget proposals by the State Senate, Assembly and Governor. Supporters such as A-A-R-P believe its passage into law is promising.
AARP New York State Director Beth Finkel issued the following statement on the State Senate and State Assembly 2018-19 State Budget proposals:
“State legislators’ support for an initiative to help New Yorkers save for retirement at work signals an impending game-changer that could potentially benefit millions of private sector employees. AARP applauds lawmakers and Governor Cuomo for including ‘Secure Choice’ in their respective state budget proposals. Now it’s time to get it done as part of the final 2018-19 budget. More than 3.5 million private sector employees in New York work for a company that offers no pension, no 401(k), no retirement savings option – in short, no way for them to build their own financial security. That’s over half the workforce – including 67% of Hispanics, 60% of Asian Americans and 52% of African Americans. Secure Choice would help address a key disparity that’s hurting New York’s communities of color by leveling the retirement savings playing field. Secure Choice would allow companies that don’t already provide their employees a savings option the chance to do so with a payroll-deduction Roth IRA. The program would be voluntary for businesses and employees. Companies would not contribute. And employees could take their IRA from job to job. Nearly three quarters of small businesses that don’t provide their employees a retirement savings option say they probably would offer Secure Choice if it becomes available. It’s a great benefit for companies to retain and attract employees, and it would give workers the chance to build their own financial security – while lessening their need for taxpayer-funded public assistance in the future. Our leaders should make sure we don’t miss this chance to address a real and growing need with a common sense solution.”