A large number of Americans do not follow any savings strategy such as automating retirement savings or even contributing to retirement plans such as the 401(k). Nearly 20 percent of Americans do not have any solid investment plan when it comes to their income. Financial advisers are of the opinion that this happens due to a lack of effort that goes into contributing towards savings. Studies show that a large number of individuals are undisciplined when it comes to saving and this is one of the major reasons they do not have much in terms of savings once they reach the age of retirement.
Another obstacle stems from the fact that a number of employers do not offer their employees a 401(k). This means that employees have to find retirement plans on their own.
Recent reports have shown that nearly 57 million Americans do not have access to a company-sponsored retirement plan. This means that roughly 50 percent of employees between the ages of 18 and 64 are not offered a company-sponsored retirement plan. Out of this number, nearly 32 million employees work in small businesses with a total of less than a hundred employees.
Oregon offers government retirement plan
The state of Oregon is moving towards the goal of reducing these numbers. Oregon, along with a few other states, is offering a one of a kind retirement savings program. Under the new program, employees across the state are being offered government savings plan to help employees contribute a fraction of their income towards their retirement savings. The program is called 'Oregon Saves".
Under this program, employers who do not offer standard retirement plans like the 401 (k) to their employees are required to deduct 5 percent of the employee's income to send it to the respective individual retirement account or IRA. The amount is deducted after taxes. Each worker can contribute as much as $5,500 in a year. Since the program is being managed by the state, employees can opt out if they do not want to participate in the program.
Nearly 5,500 employees are actively participating in the program at this point and nearly 20,000 employees are in the process.
The state is expecting nearly one million employees to participate in the program.