As the pension savings crisis grows, lawmakers at all levels are trying to do something about it.
Enter Connecticut, which announced last month that it would join the small group of states that offer state-sponsored retirement plans.
From 1 April, registrations for the plan are open.
This comes shortly after Congress unveiled Secure 2.0, a six-step plan to make retirement savings easy for all Americans.
Lawmakers are right to be concerned.
In a survey by the First National Bank of Omaha, 46% of people said they saved less than $ 15,000 for retirement.
Another 59% fear that they will not be able to retire by the age of 65.
Currently, there are ten states that offer state sponsored retirement plans.
Other states have made proposals, but have not yet approved anything.
The Connecticut plan, which is called MyCTSavings, is expected to help more than 600,000 private sector employees across the state save for retirement.
Who will qualify for the plans?
Private sector employers with five or more employees, each earning more than $ 5,000 annually, are required to participate in the plan.
Eligible employees will be automatically enrolled within 60 days.
The automatic contribution rate will be 3%.
They can choose to save more or less or change their investment selection.
The following employees will be qualified if:
- They have been with their private employer for at least 120 days
- They are 19 or older
- They perform their functions in the state
How will the plans work?
MyCTSavings will be launched in waves.
Notices will be sent to approximately 30,000 employers in April to inform them of program requirements.
As noted above, the plan was open to registrations starting April 1, 2022.
MyCTSavings accounts will function like Roth IRAs – employees can add up to the annual limit of $ 6,000.
For employees over the age of 50, the limit is $ 7,000.
Which states offer mandatory retirement plans?
According to the Capital Group, ten states offer state-sponsored mandatory retirement plans.
- New York
- New Jersey
For more information on retirement, The Sun discusses how the rules for savings withdrawals might change.
We also explain how working while collecting Social Security affects benefits.
Also, five things you need to do before applying for Social Security.
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