LANSING – State Representative Andy Coulouris (D-Saginaw) today joined Democrats in announcing a plan that will offer 401(k)-style retirement plans to employees in small businesses, opening the door to a secure retirement for millions of Michigan workers.
"Making 401(k)-style plans available to small businesses will help ensure that all the workers in our state can enjoy their golden years," Coulouris said. "The hard-working men and women employed by small businesses are a vital part of Michigan's economy, and they deserve a secure retirement."
Under the plan, the state will work with a private retirement investment planner to set up a 401(k)-style retirement plan and open it to all businesses, including those with as few as one employee. The private company will manage the retirement plan, much like the state of Michigan's own 401(k) plan. The businesses in the proposed plan can match employee contributions and the accounts will follow employees when they leave their jobs to work elsewhere in Michigan. The House Democrats' proposal is scheduled to get a hearing in committee this week.
"Expanding 401(k)-style plans will create good-paying jobs, and it will help entice our most talented workers to stay in Michigan," Coulouris said. "It will help Michigan get back on track when every worker can start to save now for a more secure retirement."
Currently, four in 10 workers say they aren't saving for retirement and 90 percent of Americans say they have financial concerns about their retirement. While a comfortable retirement requires 70 percent of pre-retirement income, Social Security provides only 40 percent of that income. [1]
The Office of Retirement Services estimates that about 2 million people will participate in the Democrats' plan. The only initial cost to the state is the estimated start-up cost of $559,000. The state will get the money back in five years through the plan.
[1] Michigan Retirement report, Michigan Department of Treasury and Department of Management and Budget, 2006.