We Need to Talk About Retirement in Colorado

Colorado’s economy is changing. Our jobs, our workforce, our education and training needs — all are evolving and that means we need to get prepared. One way to do that is by changing how we think about and save for retirement in Colorado.

Why Should I Care About Retirement?

Whether you’re just starting out or getting closer to the end of your career, saving for retirement must be a priority for Coloradans.

Current national data shows people don’t save more as they get older and advance in their careers. Additionally, 82 percent of Coloradans agree the nation faces a retirement crisis and 78 percent think it’s getting harder to prepare for retirement.

Without easy access to retirement plans, many young workers put off saving until it’s too late, then have little to live on in their retirement years.

This is abundantly true for nearly half of Colorado’s private-sector workers — over 750,000 people in their prime working years — who have no retirement savings plan at work. Other groups who don’t have access include:

  • 8 in 10 Coloradans working in small businesses
  • Almost 9 out of 10 Coloradans working in the agriculture industry
  • In Colorado, 56 percent of Hispanic workers, 49 percent of black workers, and 44 percent of female workers

What Can We Do?

The Colorado Secure Savings Plan creates a Board of Trustees to develop a plan for a public-private partnership that would offer a low-fee IRA to employees without access to workplace plans. The Board would also conduct detailed market and financial analyses to determine if the plan is feasible. If so, it would send the legislature its recommendations for final approval and the creation of the Colorado Secure Savings Plan.

How it works:

  • Gives workers the ability to invest through pooled, professionally-managed accounts with capped fees; this includes options to disburse retirement benefits through a lifetime annuity
  • Would solicit competitive bids from low-cost vendors seeking to manage plans
  • Enables workers to save a portion of their wages through automatic, opt-out payroll deduction
  • Helps small business owners save and provide employees access to retirement savings plans
  • Shields the state and employers from any financial obligation or liability
  • Applies to employees who are not offered other retirement plans besides Social Security
  • Allows workers to move from job to job and take their retirement savings with them
  • Coloradans who are contractors, self-employed, or have multiple jobs can invest in their future

Why Should Local Government Help Coloradans Save?

Six states — California, Connecticut, Illinois, Maryland, Oregon, and Vermont — have already approved programs that offer workers easy access to retirement accounts if they don’t have plans at work. Oregon began implementing its program in January 2018 for employers with 100 or more employees. As of January 24, 2018, about 20,000 employees and 300 employers were signed up. The plan will be extended to employers with 20 or more workers by December 2018. (Update: Learn more about how Oregon’s plan is doing.)

Small improvements could make a big difference. Economists in Utah found if retirees there with the lowest savings had boosted their savings by just 10 percent, or about $14,000 on average during their working years, taxpayers could have spent $194 million less to support them in their later years. The lowest-income retirees in Colorado, many with limited savings, currently depend on Social Security for 80 percent of their income, even though it is designed to replace about 40 percent of their income in retirement.

Studies show raising the retirement savings for workers with the lowest earnings will save state and local governments millions of dollars in social spending. Economists at the University of Maine say increasing retirement income by $1,000 per year for the lowest-income retirees would save Colorado taxpayers $155 million in state safety net spending over 15 years. Economists at Brigham Young University determined if the one-third of Utah’s retirees with the lowest savings had increased their savings by just 10 percent over their working years — or about $14,000 — the state would have saved $194 million in federal and state government spending over 15 years.

poll of Colorado small business owners shows strong support for expanding access to workplace retirement savings plans and policy initiatives that would boost savings. In fact, 86 percent support the idea of a workplace IRA where employees are automatically enrolled, a set amount is deducted from their pay and employees can opt out if they want.

Learn More About Retirement in Colorado

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