An estimated 55 million Americans lack access to a retirement savings plan at work, and 29 percent of U.S. households with people 55 and older have no retirement savings at all.
To help more people save for retirement, the Washington State Department of Commerce this week announced the nation’s first online portal where businesses and individuals can comparison shop for low-cost, state-verified retirement plans.
The Retirement Marketplace was created to help approximately 2 million Washingtonians who do not have access to retirement savings plans through the workplace.
About 131,000 Washington businesses, most of them small businesses, don’t offer retirement plans to employees. Small businesses struggle to offer retirement savings plans because of their cost and complexity.
Anyone can use the Retirement Marketplace to learn more about how to make the most of saving for the future. The website offers unique shopping pathways for businesses and individuals — including self-employed, part-time and temporary “gig” workers and people with traditional jobs.
“Access to affordable retirement savings plans should be available to everyone, especially small businesses and workers in today’s gig economy. I am proud that Washington is leading the way with the nation’s first voluntary, online Retirement Marketplace,” Gov. Jay Inslee said.
The marketplace is part of the Inslee administration’s goal to improve financial security for all Washingtonians, and it was one of the ideas generated by the Governor’s Aging Summit in 2013.
Other state efforts to improve financial security for residents include the Asset Building Program, access to mainstream checking and savings accounts, the Earned Income Tax Credit for people who earn low-to-moderate incomes, financial education resources for youth and adults, consumer protections and education through the Department of Financial Institutions, and a new paid family and medical leave program that takes effect in 2020.
“As a small business owner myself, I firmly believe that many, if not most, want to offer competitive benefits for employees, but the complexity and fees can make it cost-prohibitive to do so,” said Sen. Mark Mullet, D-Issaquah, sponsor of SB 5826 that created the Retirement Marketplace in 2015. “That’s why my colleagues and I supported the idea of a small business retirement marketplace. We want to make it easier to shop for private plans from providers who share our commitment to help people save for retirement.”
Each plan listed on the Retirement Marketplace meets strict criteria established by the Washington State Legislature:
- Must first be reviewed by officials at the Department of Financial Institutions and/or the Office of the Insurance Commissioner.
- Cannot charge administrative fees to employers.
- Cannot charge enrollees more than 1 percent in total annual administrative fees.
- Must go through an annual renewal process to ensure the plan and provider remain in good standing.
Participation in the Retirement Marketplace is voluntary for both employers and employees. The Department of Commerce administers the Retirement Marketplace, but enrollment takes place with the private retirement plan provider. The state does not collect personally identifiable information from site users.
People with access to a retirement plan at work are 15 times more likely to save.
“Successful businesses know the value of saving for the future and helping their employees do the same,” Commerce Director Brian Bonlender said. “When people have a solid financial foundation, it lifts up the entire economy, strengthening communities by helping more workers participate and prosper.”
Doug Shadel, director of AARP for Washington state, said the marketplace can help older adults catch up on saving for retirement.
“In addition, the marketplace can help older adults catch up on saving for retirement. “If a 55-year-old started saving now, they could add thousands of dollars to their retirement accounts in just 10 years,” Shadel said. “It’s easy to sign up, costs very little to manage and allows employees to carry their savings from job to job, even if they move out of the state.”
The site is launching with five types of 401k plans offered by Saturna Trust Company, with no administrative fees charged to Washington employers who access these plans from the Retirement Marketplace.
The site also lists Roth and traditional IRAs from Finhabits. More plans from other providers will be added to the Retirement Marketplace in the future.
To learn more about the Retirement Marketplace and find low-cost plans, please visit www.retirementmarketplace.com.