States take 'active role' in encouraging people to save for retirement

Many Americans don’t have access to an employer-provided retirement plan.

Traditional employer-based retirement plans are typically not available for contractors, freelancers, gig economy workers, and part-time workers. And only 42% of small businesses with fewer than 100 employees offer retirement benefits, according to a LIMRA 2019 study.

“We have to encourage people to start saving for retirement,” Aaron Schumm, founder and CEO of Vestwell, a workplace savings platform, recently told Yahoo Finance (video above). “The states have really taken an active role in this, which has been great to see.”

More than one-third of Americans say they’ve never had a retirement account, such as a 401(k) or an Individual Retirement Account (IRA), according to a survey. A Harris Poll released in December reported that more than a fifth of the more than 2,000 adults canvassed are saving nothing each year for retirement.

High angle portrait of female businesswoman counting finances using calculator in small shop, copy space

The easiest way to begin to save for retirement is through the workplace, Schumm said. “We need to focus on helping Americans save upfront and plan for the future in the most seamless way possible.”


A handful of states — Oregon, California, and Illinois — now offer auto-IRA state-sponsored retirement savings plans to workers without employer-sponsored plans. Other states are considering crafting similar offerings. These state-facilitated programs automatically enroll workers in moderate risk, low-cost retirement savings accounts called auto-IRAs.

We want to hear from you! Tell us your retirement questions or concerns by emailing

“Oregon was the first to go to market with the OregonSaves program, where they stepped back and said, listen, we have to encourage people to start saving,” Schumm said.

Private sector businesses in Oregon that don’t have a retirement plan for employees are required to enroll their employees in OregonSaves, which started in 2017. To keep costs low for employers, there’s no company match. (Full disclosure: Vestwell provides an online platform for employers to manage OregonSaves accounts.)

The default after-tax contribution rate for employees is 5% of gross pay through payroll deductions to their personal Roth IRA account. Workers can choose not to participate. The contribution rate increases automatically by 1% each year, until it reaches 10 %, unless the employee opts out.

Self-employed workers can also sign up for the savings plan and set up automatic contributions from their bank account.

Social networking, devices and small business during covid-19 pandemic. Busy african american man in apron sits at table and works in smartphone and laptop in interior of loft coffee shop, copy space

Three-quarters of Americans say they would participate in state-supported retirement programs if offered one in their state, according to a survey by the National Institute on Retirement Security, a nonprofit, non-partisan research and education organization.

“Encouraging small businesses to put something in place that's really cost effective and not burdensome from an overhead perspective, but really allowing those individual employees to start saving for the future is incredibly important,” Schumm said.

Kerry is a Senior Columnist and Senior Reporter at Yahoo Money. Follow her on Twitter @kerryhannon

Read the latest personal finance trends and news from Yahoo Money.

Follow Yahoo Finance on Twitter, Instagram, YouTube, Facebook, Flipboard, and LinkedIn.