In a Forbes column, Dan Doonan writes the Rhode Island made news this month when it became the twentieth state to establish a state-facilitated retirement savings program and the seventeenth to do so with an auto-IRA model. This action by the Rhode Island legislature means every state in New England, except New Hampshire, will now offer a state-facilitated savings program. States elsewhere in the nation are considering these programs as well, including large states like Michigan and Pennsylvania, with millions of potential beneficiaries in those states.
State legislatures are adopting these programs because they are both good policy and good politics. These programs represent a real effort to close the persistent retirement plan access gap in the U.S. At any given moment over the past 45 years, half or more of American workers have not been participating in either a defined benefit (DB) or defined contribution (DC) retirement plan through their employer. This lack of coverage means these working Americans are much less likely to save for retirement and, therefore, less likely to be financially independent after their working years have ended.