Did you know that the average American on social security gets little more than $15,000 a year? And did you know that more than a third of us have to rely on social security for most of our income after we retire? I'm sure you know that, on average, women spend less time in the workforce than men and we earn less. We're likely to retire with fewer financial resources than men-yet, as we generally live longer, we actually need more.
People are most likely to save for retirement if they have the option to save at work, either through an employer-sponsored pension plan or an IRA. But 2.5 million workers in Illinois don't work for a boss who offers any kind of savings plan, and that number includes more than half the women in the Illinois workforce. Without a pension plan at work, most people save little or nothing for retirement.
As one of his last acts as Governor, Pat Quinn signed legislation that will help change the picture for Illinois workers. It's simple and efficient. It won't cost the taxpayers and it won't require employers to contribute to worker retirement plans. But it will require employers who don't offer retirement plans to automatically enroll workers in a pooled plan, managed by a private investment firm that will charge fees that are lower than the industry standard. The employer would deduct a set percentage each month from the worker's wages, although the worker could decide on a smaller-or a larger-deduction. And the worker could decide to opt out altogether.
We know that when a savings plan is automatic, people are far more likely to stick with it. And while some employers complain that the program will impose new burdens, the reality is that employers today deduct state and local taxes, social security, health insurance and child support payments. Most employers use automated payroll services, so one more deduction will make little difference. To minimize the potential for problems, we exempted small and start-up businesses.
Saving for retirement is difficult, especially as many of us live paycheck to paycheck. But a small automatic payroll deduction, with the chance to opt out, will change the dynamic. I'm glad my colleagues in the legislature agreed that helping people help themselves to a secure retirement is a good idea. I'm delighted Governor Quinn signed the bill. I know that, over time, many millions of Illinois women will face a brighter future because he did.
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