Retirement is getting more and more expensive. Not only is the cost of living increasing, but former employees are living longer as well. Did you know that the “median total of retirement savings for households headed by those aged 55 to 64 is $104,000?” Although $100,000 sounds like a nice sum, when understanding that people can live 20 or 30 years after they end a career, that nice sum can seem like a horrible investment.
The state of California is looking to change that when it comes to small businesses struggling to offer retirement packages. The new California Secure Choice law will require “small businesses with five employees or more who do not offer employer-sponsored retirement plans to enroll their employees in a state-sponsored plan.” This law now gives 7.5 million employees access to retirement benefits.
Currently about half of of the nation’s private employees do not have access to retirement benefits, or have access but do not contribute.
Although the California law is a step in the right direction, it is not without cost. Many are worried about the additional regulation needed to create these new benefits. In addition, employers are wondering if this new legislation will ultimately cost more with a “matching” protocol mandating businesses match the money their employees use for retirement packages.
Only time will tell how this new legislation will turnout, but unfortunately due to the gridlock in federal congress, this is the only relief small businesses can hope for.