The organization AARP, formerly the American Association of Retired Persons, says 42 percent of Iowa’s private sector workers do not have an employer-sponsored retirement plan. State Senator Janet Petersen and Iowa’s State Treasurer Michael Fitzgerald are working to change that. They’ve proposed a state-run plan for private employees, something more than 20 states are also considering.
During this episode of River to River, host Clay Masters talks with Fitzgerald and Petersen. Both argue that the state does have a role to play when it comes to making sure its citizens are saving for retirement.
"I think that the state does have a role in making sure that we have more Iowans are financially secure. When Iowans aren't financially secure, we see the state having to invest more in their lives when it comes to their cost of health care and their cost of living," says Petersen. "If they are ill-prepared, that does fall back on taxpayers, so I see this as a positive, preventative step."
The proposal asks for $1.5 million to set up the plan that would be modeled after College Savings Iowa.
California was the first state to look at creating state-run retirement accounts for private employees, and during this hour of River to River, California State Treasurer Jason Chang and Karen Friedman of the Pension Rights Center also join the conversation.
Friedman says that many states, like Iowa, are looking at these plans to try to provide more savings options for citizens.
"These are modest retirement savings plans," Friedman says. "There is a huge retirement income crisis in the whole nation, and the reason states are leading the way on this is because congress is pretty divided right now. There's not necessarily going to be action for a very long time to come up with a national pension plan on top of social security, for example, so states are jumping into this arena."