Fewer and fewer people have access to resources that would provide economic security in retirement. Woodstock Institute identifies disparities and works to expand access to retirement savings.
In this first part of our Theory of Change series of blog posts and images, Woodstock President Dory Rand explains the ways in which Woodstock Institute is working to achieve our mission of creating a just financial system in which lower-wealth people and communities, and people and communities of color, can achieve economic security and community prosperity. In this series, our research and policy staff will discuss the strategies we use to effect positive, lasting financial systems change.
April 6 was an historic day for consumers. On that day, the Department of Labor (DOL) issued the so-called Fiduciary Rule. The Fiduciary Rule, which has been years in the making and has been vigorously opposed by industry, will require retirement investment advisors to act in the best interests of the consumers they are advising.
In 2015, the Illinois Secure Choice Savings Program Act became law. Under this law, employers with 25 or more employees are mandated to enroll their employees into a retirement savings account that is administered by the State. Employers who fall below the 25-employee threshold may voluntarily elect to participate in the program. Employees whose employers are participating in the program (whether by mandate or by volunteering) will have the option to opt out of the program. For those employees who don’t opt out, three percent of their pay will be deposited into the account unless the employee elects a different contribution amount. Employee enrollment in the program will begin in June 2017.
Millions of low-wage workers and small business employees in the United States are approaching retirement with inadequate savings to supplement Social Security benefits that will replace less than half of their pre-retirement income. Those workers face a bleak financial future in which their standard of living will be much lower than what they now enjoy as they try to subsist on near poverty-level incomes.
By Ellyn Fortino
This morning it was my honor to join United States Secretary of Labor Thomas Perez, Illinois Treasurer Michael Frerichs, Senator Daniel Biss, John Rogers of Ariel Investments, and others for a roundtable and press conference to announce the much anticipated proposed rule on retirement savings that will positively impact over a million Illinois private-sector workers. The proposed rule is open for public comments for 60 days.
Years ago, as a young married person contemplating starting a family and saving for my children’s college education, I engaged for the first time with a financial planning firm. I learned the hard way the difference between an advisor who earns commissions based on sales of insurance and investment products, and an advisor who works for fees only on a fiduciary basis and does not sell products or earn commissions (such as a fee-only Certified Financial Planner). My initial planner recommended that I invest in a particular 529 college savings plan, without telling me that the recommend plan paid the highest commissions, rather than in a 529 plan with lower costs and better opportunities to grow savings. While I eventually switched my college investments to a lower-cost 529 plan, many people remain stuck in less advantageous college investments because they received advice from advisors who are not acting under a fiduciary standard, which requires that the advisor put the investor’s interests first, not the interests of lining the advisor’s own pockets. Fiduciary standards are needed to protect consumers and help families save more for college.
President Obama endorses initiatives to make retirement savings available to workers: “To me, the answer is clear. We need to uphold the basic tenet that says, in America, a lifetime of hard work should be rewarded with a retirement that is secure and dignified,” he wrote. Woodstock Institute agrees with the President, who stated: “This is about more than bank accounts or bottom lines. It’s about the values that make America great — honesty, fair play, dignity. And it’s about our commitment to each other and respecting everyone’s value, no matter how young or old you are.” The President recently called for the Department of Labor to develop rules that will help states set up automatic retirement savings programs for private-sector workers. Woodstock Institute supports this development and calls on the Department to issue the rules quickly.
CHICAGO—Woodstock Institute is participating at the 2015 CGI America meeting in Denver, Colorado today to report on its successful CGI America Commitment to Action to advance retirement security with automatic retirement savings accounts in Illinois. Since Woodstock announced its commitment in 2013, Illinois has enacted the Secure Choice savings program to expand access to employment-based retirement savings to an estimated 2.5 million people.
By Hal M. Bundrick
NEW YORK (TheStreet) -- Half of Americans employed in the private sector work for small businesses. That means many workers simply don’t have access to retirement plans. Big firms lure talent with tax-advantaged savings plans like 401(k)s -- and even match workers' contributions, while neighborhood businesses often lack the means to provide such benefits.
By Justin Lynch
On a fall morning in 2011, Daniel Biss, a State Senator in Illinois, was listening to a lobbyist give a self-aggrandizing presentation about his work in the State Capitol. But one “accomplishment” on this lobbyist’s list—killing an automatic IRA savings bill which would have automatically enrolled those without a retirement account—stood out.
Millions of Illinois workers struggle to build retirement savings. The tides started to change when former Governor Pat Quinn signed the Illinois Secure Choice Savings Program into law. Private sector employers with 25 or more employees who do not offer a retirement savings option will automatically enroll workers into the Secure Choice plan. Employees will fund their Roth IRA accounts through payroll deductions. This achievement could not have been accomplished without the dedicated work of Heartland Alliance for Human Needs and Human Rights, a leader in the Secure Choice campaign. Secure Choice’s influence is growing across the country.
By Patricia Hart
Earlier this week, Upshot’s David Leonhardt summarized new research by economist Stephen J. Rose that concluded: "Income inequality has not actually risen since the financial crisis began." Rose’s findings counter conventional wisdom that income inequality has widened in recent years, however, the findings do not consider the important role of wealth inequality. The Urban Institute released an interactive data visualization that helps present a more complete picture of the American economic reality.
When then-governor Pat Quinn signed the Secure Choice retirement savings bill into law in January, reporters and policy wonks across the country took notice because the Illinois program could become a model for other states and the federal government.
By Carrie Sheffield
Public pension liabilities are a growing headache for many states, and are especially bad in Illinois. Fortunately, the Land of Lincoln now offers a possible template for how to shift state workers away from defined benefit (DB) pensions into more sustainable defined contribution (DC) plans. If successfully implemented, it would give public sector workers more control over their retirement and shield taxpayers from unsustainable pension burdens.
By Scott Cooley
When you travel abroad and tell people that you are from Illinois, the response usually includes something about Al Capone, corrupt governors, or Michael Jordan. People might even mention our bitterly cold, interminable winters or (delicious) pizzas the size and weight of manhole covers. Now, we might see another reaction: an appreciation of Illinois as a state that is attempting to help more workers save for retirement.
By Epstein Becker Green
On January 4, 2015, the governor of Illinois signed into law the Illinois Secure Choice Savings Program Act (S.B. 2758). This law—first of its kind in the nation—requires certain employers to provide an automatic payroll deduction for savings in a Roth IRA for employees who are over age 18 and who do not opt out. Employers who are subject to this mandate are those who have 25 or more employees in Illinois, have been in business for at least two years, and have not offered their employees tax-favored retirement benefits in the preceding two years. Employers not otherwise subject to the Act may participate in the Program on an elective basis. The Program will not be activated before 2017, and affected employers must establish a payroll deposit arrangement “at most nine months” after the Program opens for enrollment.
Illinois just became the first U.S. state to adopt a new approach to a big problem in the nation's retirement saving system: the lack of workplace saving options for low-income workers.
By Lisa Kaplan Gordon
If you live in Illinois, saving for retirement is no longer just a good idea, it's automatic.
By Tori Latham
Gov. Pat Quinn signed into law Sunday a bill sponsored by state Sen. Daniel Biss (D-Evanston) establishing a savings program to help Illinois residents prepare for retirement.
Outgoing Illinois Gov. Pat Quinn signed legislation Sunday that will expand access to employment-based retirement savings accounts for more than 2 million private-sector workers in the state.
By Aimee Picchi
One of the major dilemmas facing America is how to fund the retirements of today's workers, especially when four out of 10 haven't even started saving.
By Jennie L. Phipps
Illinois has just adopted a unique plan to get its residents to invest for retirement -- automatic enrollment in a savings program for private-sector workers whose employer doesn't offer a 401(k) or similar plan.
By Josh Barro
Illinois is taking a novel approach to getting its residents to save for retirement. Starting in 2017, most state residents with jobs who don’t already have a retirement plan at work will be automatically enrolled in individual retirement accounts, funded through a 3 percent deduction from their paychecks.
By Dan Kadlec
Illinois will automatically enroll workers who lack an employer retirement plan into a state-run savings program
By Justin King and Elliot Schreur
New savings options—such as myRA and Secure Choice—might help ordinary Americans grow their assets without sacrificing emergency savings.