OLYMPIA – State lawmakers are set to hear legislation requested by the Office of the State Treasurer (OST) that would address the growing crisis of retirement savings in Washington. Known as Washington Saves, the proposal would create an automatic Individual Retirement Account (IRA) for Washingtonians without access to employer-based retirement systems and invest those funds on their behalf.
According to the AARP Public Policy Institute in August of 2022, roughly 1.2 million Washingtonians do not have access to a retirement savings plan, which is about 43-percent of Washington’s private sector employees.
Washington Saves, introduced by Representative Kristine Reeves (D-Federal Way) as House Bill 2244 and Senator Mark Mullet (D-Issaquah) as Senate Bill 6069, would be an essential tool to empower Washington’s workforce as individual savings deficits are poised to add significant pressure for current and future generations, including the two-thirds of Millennials who have nothing saved for retirement.
“Working families are struggling to pay for their day-to-day needs, let alone save for retirement. More than half of Washington households lack savings for retirement, leaving our seniors and families financially vulnerable as they approach later life,” said Reeves. “I introduced the Washington Saves program to create more opportunities for workers to save for their retirement and help us fight for a future that includes us all.”
Already, fifteen other states have adopted similar proposals to spur retirement savings as the risks of leaving the issue unaddressed, including future pressure on individual and state budgets, becomes increasingly clear. By 2040, vulnerable older households in Washington are expected to face an average annual income shortfall of $4,810.
“This bill is a much smarter, more efficient way to help workers save for retirement than expecting every employer across Washington to try to start up their own IRA program for their employees. The bill doesn’t force anyone to do anything, but it will unlock retirement savings opportunities for those workers who want it and don’t currently have access,” said Mullet. “This bill will help make it as easy as possible for people to save money into their retirement directly from their paycheck.”
Across Washington, a recent statewide effort to evaluate retirement security issues uncovered a common theme — employers and workers in all types of workforces need simple, reliable access to long-term retirement savings options.
State Treasurer Mike Pellicciotti hosted a multi-city series of public meetings focused on the future of retirement that ignited a dialogue about the steps needed to holistically address the gaps Washingtonians are experiencing in savings. Notably, expanding access to savings options spurs additional saving activity as workers are 15 times more likely to save for retirement if they can use payroll deductions, as would be the case with Washington Saves.
“We heard loud and clear from people all over the state that there is a severe lack of workplace retirement savings options that threaten the long-range economic prospects for Washingtonians from all backgrounds,” said State Treasurer Mike Pellicciotti. “Every one of us deserves to retire after a lifetime of contributing to our communities, families and employers. Washington Saves will help course correct and build the savings necessary to age with dignity.”
The concept has already attracted support from a broad coalition in Washington and from around the country. In November of 2023, Pew Charitable Trusts indicated that a large majority of Washington’s small-business owners, 72-percent, support creation of a state-facilitated retirement savings program.
“Americans want to build a secure retirement. Yet more than half of private-sector workers in the U.S. work for an employer that’s unable to offer retirement benefits,” said John Scott, director of The Pew Charitable Trusts’ retirement savings project. “When workers are financially secure, they’re better able to withstand financial shocks and more likely to save for their future. The Washington Saves Act is a win for workers, employers, and taxpayers. We urge the Legislature to pass it promptly.”
HB 2244 is set to be heard in the House Committee on Consumer Protection & Business on Tuesday, January 23rd at 1:30pm. SB 6069 will be heard in the Senate Ways and Means Committee on Tuesday, January 23rd at 4:00pm.