Coloradans whose employers don’t already offer retirement accounts will be automatically enrolled in a new savings program administered by the state.
Most of these employees have already started seeing paycheck deductions this spring, with the money going into a personal retirement account. The rest, who work at companies with between 5-14 employees, will be signed up by the end of June. Companies with fewer than five employees aren’t required to sign up.
Treasurer Dave Young’s office is managing the new Colorado SecureSavings program, which was created through legislation passed in 2019.
“I think that everybody deserves a sustainable and dignified retirement. And right now we know there are a million people in the state of Colorado that aren't accumulating any savings, and they won't be sustainable on Social Security alone,” Young said in an interview.
Employees can opt out, though Young hopes that enough people will stay in the savings program and contribute to their accounts to make a difference for their own financial outlook, and to benefit taxpayers who pay for social programs like Medicaid, housing and food support.
“People that aren’t prepared for retirement are going to be accessing safety net services: $18 billion dollars here in the state of Colorado over the next 15 years,” Young said.
Lee Wood, co-founder of Wood’s High Mountain Distillery in Salida, has signed up his eight employees. He said one person opted out because he was already enrolled in another retirement plan. A couple of others have opted out, too.
“Just because they're not quite in a position to give up the percentage out of their paycheck that you need to,” Wood said.
Employees can contribute anywhere from 1-10 percent of their paychecks to the retirement accounts, which are Roth IRAs. Employers do not provide matching funds. The accounts will stay with employees if they leave a job, so employees don’t have to roll over money into a different account, as often happens in employer-run retirement programs.
Taylor Howell is the head bartender for Wood’s High Mountain Distillery. She said before this, no employer has offered her the option to set up a retirement account. At age 33, she’s happy to have the new plan.
“It’s really easy to do. I don't really notice much of it coming out of my paycheck, and just knowing that I'm set up… it was such a nice, kind of like, surprise gift,” she said.
Wood had been looking for ways he could offer retirement savings to his employees like Howell for years, and said the new state program filled that need.
“It has been really difficult to find the right combination of administrative costs and ease,” he said. “We have a lot of part-time employees, a lot of hourly employees, and putting a retirement program together, it was really a challenge.”
As an employer, he had to pay the administrative costs to set up the program, but he said it hasn’t been a burden.
Self-employed Coloradans or people who work in very small companies can enroll in the program, but they won’t be automatically signed up this spring.
The funds are managed by BlackRock and State Street Global Advisors.
“We can have people have a sustainable and dignified retirement using all their own resources if we can just help them make that start,” Young said.
