Saving for retirement in Washington will become more accessible and convenient for those without a retirement account.
Washington is now the latest state to pass an automated savings program for its residents.
The program is set to go into effect beginning in 2027.
Gov. Jay Inslee signed the “Washington Saves” bill into law in March.
When it starts, eligible workers can be automatically enrolled in the program. Employees of any private business in Washington that does not currently offer an IRA or other workplace retirement plan can choose to enroll in the Washington Saves program.
Once enrolled, a percentage of their paycheck will be invested on their behalf in the IRA. The IRA accounts will stay with employees across their careers, and people can access funds for emergencies and other exempted needs.
The bill resulted from a request from state Treasurer Mike Pellicciotti, in addition to a multi-chamber collaboration partnership with state Sen. Mark Mullet, D-Issaquah, and state Rep. Kristine Reeves, D-Federal Way. The collaborators engineered Washington Saves to address the developing crisis of not saving for retirement in the state.
According to research by Econsult Solutions Inc., state-facilitated programs across the country have helped workers save nearly $840 million.
An Econsult study, “The Cost of Doing Nothing,” discusses several repercussions of people not saving for retirement. The study concluded that the lack of savings will lead to $3.9 million in increased state spending through 2040. It also found that 72% of small-business owners in Washington state support creating a state-run retirement savings program like Washington Saves.
In addition, according to the State of Washington and Pew Research, Workers are 15 times more likely to save for retirement if they can use payroll deductions, but many small businesses cannot offer retirement benefits due to high startup costs and lack of administrative capacity. An auto-IRA program will provide financial peace of mind.
The Washington Saves program operates on several vital aspects. The first is auto-enrollment.
The second is that the program is optional. Employees are not required to participate in the program and can even pause or change their contributions at any time they wish.
Third, according to the state treasurer’s office, upon investment maturity, those enrolled and beneficiaries can withdraw funds starting at age 59½.
The fourth principle of the program is that the state says the Washington Saves program is similar to other investment programs in that a governing board will oversee it and work with investment professionals to grow the auto-IRA investment pool.
The bill was Engrossed Substitute Senate Bill 6069.
