We often hear about senior living employers who do little to help employees plan for retirement. Now let’s talk about the other side of the coin: workers who ignore what’s available.
The reality is that many senior living organizations do offer ways for team members to prepare for their, ahem, golden years.
Although the days of defined pensions may be pretty much over, many firms make 401(k) plans available. Some even offer a match up to 6% of pre-tax income. A few operators even offer boutique benefits that go beyond that amount.
Yet employees often take a pass on these choices, which really is nothing short of a travesty. To be sure, it’s not difficult to see why someone who is struggling to pay the bills might be disinclined to set aside funds for some far-off future. As the saying goes: When you are up to your rear end in alligators, it’s hard to remember that the goal was to drain the moat.
My view is that this dynamic probably is not going to change so long as carving out funds for the future is seen as something that’s weighed against immediate concerns. And probably the best remedy here is to remove choice from the equation.
That’s why I’m pleased to see a number of states taking action to essentially make putting money aside an automatic rather than debatable topic.
Here in Illinois, a state initiative shows one way it can be done.
The Illinois Secure Choice Retirement Savings Program mandates that Illinois businesses with at least 25 workers automatically enroll their employees in a state-sponsored retirement savings program if they do not provide a qualified savings plan of their own.
Specifically, employers set aside 5% of a worker’s pay and put it in a retirement account. No program is perfect, and this one has its warts and detractors. Some argue that the new law places an unfair burden on small businesses, which essentially must manage the program. And that is a very legitimate concern.
But what makes this a great idea is that the money being set aside essentially never is seen. It’s just another deduction being taken out of an employee’s paycheck.
Is this approach perfect? Hardly. And I’m sure better programs can and will come along. But this one is a dramatic improvement — as many employees eventually will discover.