Updated with correction
When it comes to looking at how states are addressing retirement preparedness among their private-sector workers, it is faster to count the states that have not started.
Since 2012, 43 states have either considered or enacted legislation to study or begin implementing state-facilitated retirement savings programs for their private-sector workers not already covered. Last year was busier than ever, with legislation introduced in at least 24 states and cities. Barring disruptions like the current COVID-19 crisis, which could paralyze legislatures everywhere, there is legislative activity in 17 states and at least seven states actively studying how to implement a program.
The list of enacted so-called secure choice programs so far includes 11 states and the city of Seattle, with Oregon, Illinois and California already taking participant contributions. The latest addition was New Mexico, where Gov. Michelle Lujan Grisham on Feb. 26 signed the New Mexico Work and Save Act, creating a voluntary automatic low-cost retirement savings option for workers without employer-based retirement accounts, plus an online marketplace of private-sector providers for employers.
It is happening in blue and red states, including North Carolina and Virginia. Legislators overwhelmingly approved a bill March 4 directing Virginia College Savings Plan officials to study the feasibility and design options for a state-sponsored private-sector retirement plan and to report back by Dec. 15. A similar study effort launched by Colorado's General Assembly in 2019 led to the introduction of a Colorado Senate bill March 10 to establish a state-sponsored IRA program.
Proponents of private-sector solutions at the state level are also celebrating removal of one potential hurdle: a 2018 legal challenge filed against the $2.3 million CalSavers Retirement Savings Program by the California-based Howard Jarvis Taxpayers Association, which argued unsuccessfully that it was preempted by the Employee Retirement Income Security Act and no taxpayer funds should be spent on it.
The March 11 dismissal of the case for a second time "reinforces the long-held belief of the states that they have been on sound legal ground to adopt these auto-IRA savings programs. I'm even more optimistic now that we might see one or two new state auto-IRA programs enacted later this year," said Angela Antonelli, executive director of the Center for Retirement Initiatives at Georgetown University.
"It comes at a great time during the 2020 legislative sessions when many more states are considering new programs this year because of the successful and popular launches of programs in Oregon, Illinois and California," Ms. Antonelli said.
A growing body of data showing the potential impact of not doing anything is also driving acceptance, experts say.
"These state studies are so valuable because they help make real for legislators the significant budget and economic impacts of an aging population unprepared financially for retirement. In Colorado alone, the budget costs and forgone tax revenues are estimated to be almost $10 billion over the next 15 years. That's a major economic hit that can be easily avoided today by simply making it easier to connect workers now with a way to save," Ms. Antonelli said.
Backers of a Pennsylvania House bill promoting a private-sector program say it can help avoid a projected $14 billion in additional social services for unprepared seniors between 2015 and 2030, and the loss of $1.4 billion in tax revenue from reduced consumer spending.