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Connecticut Retirement Security Program Advances

Connecticut could save $90 million by 2032 if low-income retirees save enough to raise their retirement income by $1,000 a year. (quinntheislander/Pixabay)
Connecticut could save $90 million by 2032 if low-income retirees save enough to raise their retirement income by $1,000 a year. (quinntheislander/Pixabay)
January 23, 2018

HARTFORD, Conn. – Connecticut has taken an important step toward implementing its retirement security plan. The authority overseeing the payroll savings plan is searching for an executive director to establish and manage the plan.

Created by the Legislature in 2016, the program will let those who work for businesses with five or more employees but no retirement plan save for retirement through payroll deductions.

According to John Erlingheuser, director of advocacy and outreach for AARP Connecticut, the program is on track to begin operations soon.

"Hopefully by the end of 2018, individuals who have no way to save for retirement at work will be able to start doing that, and there are about 600,000 people like that in Connecticut," he says.

Workers will be enrolled in the plan automatically but they can opt out, and it will not rely on contributions from either employers or the state.

Erlingheuser points out that by 2032, the state could save more than $90 million in social service costs if low-income retires save enough to increase their retirement income by just $1,000 a year. He says payroll savings plans are the surest way to help them save.

"People are 15 times more likely to save for retirement if they can do it at work through a payroll deduction than if they had to go and open up an IRA account at the bank," he explains.

According to data from The Center for Retirement Research at Boston College, there is a $7 trillion retirement savings deficit among older Americans.

Erlingheuser notes that Oregon recently launched a retirement security plan almost identical to Connecticut's.

"Since August of 2017, they've already got half-a-million dollars saved from individual accounts so we're really excited about not only replicating but hopefully improving upon the work that they're doing in the state of Oregon," he adds.

Andrea Sears, Public News Service - CT