Are you a worker worried you won't have enough money to retire?
Are you an employer who doesn't offer either a pension or a 401(k) to your workers?
If so, CalSavers is aimed at you.
On July 1, California launches an ambitious state-sponsored retirement program for the private sector. All employers with five or more workers will be required to sign on if they don't offer their employees a way to save and invest for retirement. As many as 300,000 businesses must comply over the next three years.
That will give some 7.5 million workers who currently have no access to a pension, 401(k) or other qualified retirement plan an easy way to deduct savings from their paychecks. And it will bypass often complex and costly set-up procedures as well as the liability that has deterred many businesses from offering investment programs to their employees.
"When it comes to retirement income security, most working Californians are in trouble," said Nari Rhee, director of the Retirement Security Program at UC Berkeley Labor Center. CalSavers, she said, can help "private sector workers who have fallen through the yawning gaps in the U.S. retirement system."
In the Golden State, 61% of private sector workers have no access to a pension or 401(k), up from 49% two decades ago, as businesses have cut back on benefits, according to a labor center study. California ranks 45th out of 50 states in the share of workers who have access to a retirement plan.
Social Security, with a current average benefit of $1,461 a month, won't meet basic needs for many in a state with skyrocketing housing and medical costs.
"People are worried they will have to work until they die," said Katie Selenski, CalSavers' executive director. "If our elderly are living in poverty, it is a moral problem, but also a fiscal problem. If they have to rely on public assistance, it drives up taxpayer costs."
California is the third state to implement a broad state-sponsored system as it grapples with an aging population and a growing wave of baby boomer retirees. These so-called "Secure Choice" programs are up and running in Oregon and Illinois. Other states are working on similar plans.