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State-mandated retirement savings programs have continued to gain momentum with three new programs passed by state legislatures this year. The total number of state programs now stands at 19 with assets nearing $1 billion, according to the Georgetown University Center for Retirement Initiatives. States are also beginning to explore interstate partnerships to help lower costs and increase the efficiency of state-supported plans, CRI said.
The driving force behind state-supported plans is the alternative high cost of doing nothing to address a significant retirement savings gap among private sector workers in the United States. This gap is a result of many small businesses struggling to afford the costs, administrative burdens and responsibilities of offering a plan. With a population that is increasingly aging with insufficient retirement savings, the demand for state government programs to act as a safety net could cost $1.3 trillion over the next two decades.
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