Michigan’s Secure Retirement Program Can Help Workers Build Savings

Although most Americans save for retirement through employer-provided retirement plans, nationwide nearly half of workers in the private sector lack access to retirement savings at work. In Michigan, as many as 1.5 million workers—or 42% of the state’s private-sector workforce—are in this category.

With many employers, including small businesses, unable to provide retirement benefits because of high startup costs and a lack of administrative capacity, Michigan must grapple with a key question: What happens when residents don’t have enough money to retire?

Adopting an automated retirement savings program would help Michigan address these critical issues. Earlier this year, lawmakers introduced legislation to create the Michigan Secure Retirement Savings Program (H.B. 5461). Such a program would make it easier for Michigan businesses to help workers save for retirement by creating individual retirement accounts (IRAs) and automatically enrolling workers who don’t have access to employer-based benefits—all at no charge to employers. Businesses would simply enroll their workers and process employees’ payroll deductions, and workers would always control their contribution level and could opt out at any time; no one would be required to participate. If Michigan were to enact such a program, it would join 15 states that have established similar programs to help workers save.

Features of a Michigan Secure Retirement Savings Program:

• It’s an easy-to-use, no-cost retirement benefit that employers can provide to their employees.
• It’s not mandatory for workers, so savers can opt out at any time.
• Participants can withdraw their contributions at any time, tax- and penalty-free.
• Workers always own their IRAs; the state and the employer have no claim on workers’ contributions.

Visit the retirement savings project home page for more information on Pew’s work on retirement savings.