New bill would encourage early saving for retirement

February 3, 2014 | Economic Opportunity Institute

Photo by Keith Ramsey via Flickr

Photo by Keith Ramsey via Flickr

Getting people to save for their future automatically is the goal of legislation that gets a Senate committee hearing today in Olympia. Called “Save Toward a Retirement Today” or “STaRT,” the bill creates a basic, voluntary retirement savings plan that small businesses could offer to their workers. Washington and many states face unprecedented demands on social services as people hit their 50s and beyond with little or no retirement savings.

The bill’s House sponsor, Rep. Larry Springer (D-Dist. 45), Kirkland, said he does not buy the argument that they lack personal responsibility.

“I’m willing to bet that the majority of those people probably worked really hard – for 20 years, 30 years, maybe longer,” said Springer. “They more than likely didn’t have the education they needed; they had other issues that got in the way. But it’s not because they’re lazy.”

A 2013 AARP survey found more than 460,000 Washingtonians between ages 45 and 64 have less than $25,000 saved for retirement. State-sponsored savings plans have been introduced before in the legislature. However, Springer, a Democrat, said he already has a half-dozen Republican co-sponsors for the House bill (HB 2474).

About a dozen states are considering similar plans. David John, senior adviser, AARP Public Policy Institute, said it has been proven that the easiest way to get people to save more is to make it automatic – as a payroll deduction.

“They take the average participation rate – from maybe three out of five, to four out of five, or even nine out of ten. We have very firm data that workers like these automatic proposals,” John said.

The STaRT accounts would not be aimed only at older workers, John said, because it’s critical to start saving early, from a person’s first paycheck.

“If you don’t start to save immediately when you go to work, you find that when you reach age 35 and 40 or so, either you’re going to have to sharply change your expectations or you’re going to have to save a substantially higher proportion of your paycheck,” he explained.

About half of all workers, and 80 percent of those at very small businesses, don’t have access to retirement savings plans on the job, John said, adding that this type of plan does not compete with private banks, which generally are not interested in courting small investors.

Via Public News Service

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Posted in Retirement Security, Retirement Security Accounts


  1. Ulysses Hillard says:

    Could somebody please list out how this proposal compares to the California Secure Choice Retirement Savings Trust Act (SB 1234)?

    • Economic Opportunity Institute says:

      The California Secure Choice Retirement plan has several features that are different from the START proposal in Washington State. The CA plan only allows contributions from workers, while START gives employers the opportunity to contribute. In California all businesses with five or more employees that don’t have a retirement plan are required to enroll their employees, while START is voluntary. There will be no investment options in CA – all workers will receive a specific rate of return each year on their funds. START will provide a limited set of options within a traditional defined contribution retirement plan, giving workers the opportunity to realize higher gains over the long term. ~Gary Burris, EOI Senior Policy Associate

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