Whether you’re an employer or an employee in Oregon, there’s a good chance you’ve heard of OregonSaves, the state-run retirement program that launched statewide during the latter half of 2017.
What exactly is OregonSaves? It’s the State of Oregon’s attempt to address a widely acknowledged problem in both our state and country: the lack of adequate retirement savings for a great many people. Even for those who have a retirement plan at work, some opt out or contribute less money than they probably should. According to the OregonSaves website, one million workers in the state don’t have the option to save for retirement through their employer. Moreover, the Federal Reserve and the National Institute of Retirement Security report that as of 2013 the average American household had only $3,000 saved for retirement and the average household approaching retirement age saved just $12,000. Thirty-one percent of non-retirees reported that they had no retirement savings at all and no pension. These are frightening numbers.
OregonSaves may be a helpful option for these individuals. The program establishes Roth Individual Retirement Arrangements (Roth IRAs) for all employees, unless they opt out, with contributions coming from each employee’s paycheck. The default amount is 5 percent of their earnings, although that can be increased or decreased at will. It’s the employer’s responsibility to deduct and monitor payroll deductions. The account then becomes the employee’s own Roth IRA, which they can take with them to their next employer provided that business participates in the OregonSaves program. The main differences between this Roth IRA and one you can set up on your own are the limited investment choices — there are only three — and the asset-based fee of 1 percent.
Sometimes we all need a push in the right direction, which is the operating principle behind OregonSaves. Requiring employers to provide a retirement plan or register for OregonSaves will likely help increase the number of people who actively save for retirement, which should help address some of those scary statistics I mentioned earlier and make the future for retirees look a little less scary.
The next question for employers and employees at companies that don’t have a current retirement plan is, “Should we join OregonSaves or should we have our own plan?” The answer is, “It depends.” There are many options, ranging from traditional 401(k)s to 403(b)s, Simplified Employee Pension IRAs to Retirement Plan Exchanges, and, of course, OregonSaves. The best plan for you can depend on many factors, including the size of your company, its financial condition, your need for employee retention and the personal financial goals of the owners. Before you make a decision, make sure you know all of your options. Please feel free to email or call me with any questions. •
Tom Delaney is a financial advisor with Bridgetown Wealth Management, a team of advisors committed to helping local businesses grow and thrive. He also offers Securities and Investment Advisory Services through Waddell & Reed, Inc. Tom was lured from New York by his wife Amy, a Portland native, with promises of great food, great beer and the natural wonders of the Pacific Northwest. They live in Southeast Portland with their two children. He can be reached at 503-280-7155 or firstname.lastname@example.org.
Tom Delaney is a Financial Advisor offering Securities and Investment Advisory Services through Waddell & Reed, Inc., a Broker/Dealer, Member FINRA/SIPC and Federally Registered Investment Advisor. Waddell & Reed, Inc. is not affiliated with Bridgetown Wealth Management.
For more detailed guidance regarding the OregonSaves program, please refer to their website (listed below). Waddell & Reed is not endorsed by, nor is it affiliated with, the ‘OregonSaves’ program.
bridgetownwealthmanagement.com | oregonsaves.com