Most small business owners find it hard to get employees on retirement savings plans due to the high costs. As a result, some employees are forced to work on their own when it comes to setting up 401(k) plans.
To address this problem, Oregon introduced a state-sponsored retirement savings programs that all employees within the state get an automatic enrollment in Roth IRAs.
This was an unprecedented move by the state of Oregon in an attempt to address the high-level retirement inequality in the state. Therefore, the only way to encourage more employees working for small companies to begin saving for retirement is by making things easy for them.
A recent study revealed a large number of workers in America do not have sufficient retirement savings while some do not even have a retirement account. In fact, more than 50% of employees in the United States are uncertain about their financial security after retirement. As a result, there is a need for state governments to step in and help address the high levels of retirement inequalities.
Most American households have been experiencing some improvements in savings as a result of stock market gains and rising home values. From the late 1980s, the number of unprepared working-age households has increased by over 20%, and this means that most people are more likely to experience financial challenges during retirement.
This worrying trend has been caused by a wide range of factors, and some of them include lower interest rates, longer lifespans, and a higher Social Security retirement age. Consequently, most people left with Social security as their only source of retirement income.
Low-income earners seem to have bleak future as there are no guaranteed pensions. The retirement savings inequality is attributed to defined savings plans that were introduced to replace guaranteed pensions.
The retirement accounts for lower and middle-income families are negatively affected by stagnant earnings and escalating housing costs. On the other hand, climbing investment values seem to favor wealthy households leading to existing inequalities when it comes to retirement savings.
The Federal Survey of Consumer finances recently revealed that the most affluent families continue to record solid savings growth as compared to other people. The inequalities are also witnessed across demographic groups where whites have solid savings as compared to Hispanics and African-Americans.
