November 21, 2023
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Forcing workers to save may be key to retirement


Taxes and savings are much in the news these days.

Baby boomers aren’t saving enough for retirement. Millennials will need $2 million portfolios in order to achieve a decent level of retirement income.

Federal income taxes are too high – and don’t get us started about California. Old-fashioned pensions are largely gone from the private sector. Social Security is or is not going broke.

A March 17 report by a panel of California experts broke new ground in the race to find a savings solution.

It recommended that California create a new program, California Secure Choice, a government-managed, low-cost alternative to IRAs that would require employers to enroll workers automatically in the savings program.

According to a report on the news website Capital & Main, the panel found “of the 6.8 million workers potentially eligible for the state retirement program, 70 to 90 percent would likely participate in a program that deducted as much as 5 percent of their after-tax income for retirement savings.”

Secure Choice is modeled on the Obama administration’s “MyIRA” proposed plan that would also offer a government-managed plan to create simple, low-cost retirement investment products.

However, it would be strictly voluntary.

Under Secure Choice, employers with five or more workers would not need employees’ approval to begin enrollment and deductions. Officials said that’s the only way to increase notoriously low enrollment rates for voluntary retirement programs. The program would cover all employees but not independent contractors, at least initially.

Secure Choice is meant to fill the gap between Social Security, a system that’s going to have to undergo some changes in order to meet its commitment to pay benefits, and existing retirement schemes like IRAs and 401(k)s which have been fully utilized by relatively few employees.

The program would act a lot like Social Security in that participation would be pretty close to mandatory — opting out would require an affirmative action. But it would also offer returns that are much higher than rates obtainable on certificates of deposit or money market funds today.

Green certification laudable

Santa Barbara County’s Green Business Certification program has impressed us over the years for being one of relatively few economic initiatives that’s truly county wide.

Over the years, dozens of businesses have gone through the lengthy certification process and many have completed recertification during the past year.

This year’s awards luncheon March 23 at the Santa Ynez Valley Marriott featured an impressive lineup of companies, including CMC Rescue and the Ramada Inn Goleta. It also featured Hardy Diagnostics founder Jay Hardy talking about the benefits but also challenges presented by the standard.

Program director Frances Gilliland announced important changes. For example, a cohort group will participate in the county for the first time, meeting, sharing ideas online and in person and working together to complete the certification checklist. This will also allow businesses with similar environmental profiles to swap solutions and speed the process. There will be a small fee for certification for the first time.

Give Gilliland credit for evolving the Green Certification to meet the needs of budget and economic challenges – it’s one of only 21 programs statewide and appears to be gaining traction.

Perhaps someday Green Certification will be adopted by Ventura and San Luis Obispo counties, too.