Planning for retirement can be a terrifying prospect for many working families. Between housing, healthcare, and child care costs, plus loans to pay back, retirement savings may feel out of reach. Nearly half of all Maine workers in the private sector lack an employer-sponsored retirement savings plan such as a 401(k).
But thanks to new legislation, working Mainers have another way to save for retirement. LD 1622, aka the “Work and Save” Law, establishes a Maine Retirement Saving Program open to workers without an employer-sponsored retirement plan and those who are self-employed. A portion of one’s paycheck can be set aside for retirement in a state-run Roth IRA fund overseen by the Office of the Treasurer. (Unlike a traditional IRA, Roth IRAs tax deposits now so you don’t pay fees when you withdraw your money later.) This fund is in the employee’s name and, once created, follows the employee if and when they change jobs.
Senate Majority Leader Eloise Vitelli is the lead sponsor of this law. She wanted to provide people with the tools to be secure financially well into their golden years.
”The whole premise here is to make it simple and automatic, so that in fact people will start to save,” Vitelli told WABI. “They’ll start to see that they’re building a cushion for their future, and that in itself will provide them incentive to keep going.”
In a recent op-ed for the Portland Press Herald, Vitelli explained that the benefits of the program will extend to all Mainers, not just those who use the program:
“Right now, because so many retired Mainers have such a small fixed income, they rely on social safety nets, including state welfare programs, just to make ends meet…if retired Mainers had just $1,000 more in income from savings per year, the state would save a total $15.6 million per year by 2032. That means more Maine retirees will be living their later years in dignity, and the program will simultaneously take pressure off Maine taxpayers.”
The program would also support our state’s small businesses, many of which lack the resources to provide their staff with a retirement fund.
Mainers for Working Families is a proud supporter of this law, and we’re grateful to Senator Vitelli for her efforts to ease the difficult transition into retirement.