Start saving for retirement today.

CalSavers makes saving for retirement accessible to everyone at any income level.

by Cordell Thomas, Chief Impact Officer, United Way of the Inland Valleys

Should you procrastinate referencing your saving for retirement? No. The right time to start is always NOW! So you are young, as I was, thinking that I would live forever, until the reality of procrastination crept upon me. I didn’t take seriously the match made available with my company, and lost out on some important years that I could have accumulated more in savings.

Waiting to get started in retirement savings will make a big difference in how much you will be able to accumulate once you hit your golden years.

Take for example a 30 year old worker making $50,000 per year. If this worker saves just 10% of their income into a tax-deferred savings account, (assuming 6% rate of return and 1.5% annual salary growth) this worker would have $1,100,000 by age 67. And by starting just 5 years sooner and it could be $1,500,000 at 67. Conversely, waiting to start at 35 will decrease your net to around $717,000.00 by 67.

What if your worplace doesn’t offer a retirement plan? And, what about workers with salaries far below $50,000 per year? Is it still possible to save? The answer is YES!

There is an opportunity for many that don’t have company match opportunities, and those that may not have tax-deferred savings opportunities now. In California, CalSavers has now become law. CalSavers will open to all eligible employers beginning July 1, 2019.

The CalSavers program will ensure nearly all Californians have access to a workplace retirement savings program. CalSavers offers employees a completely voluntary, low cost, portable retirement savings vehicle with professionally managed investments and oversight from a public, transparent board of directors.

CalSavers provides employees a retirement savings program without the administrative complexity, fees, or fiduciary liability of existing options for employers. Any employer with at least five employees that doesn’t already offer a workplace retirement savings vehicle will be required to either begin offering one via the private market or provide their employees access to CalSavers. . Check with your local United Way office, and request information about an opportunity to plan for retirement through CalSavers.

Are you ready for retirement?

Each generation is projected to retire poorer than the last: 55% of young workers age 25-44 have projected retirement incomes below 200% of the federal poverty level (a commonly used threshold for economic hardship), compared to 39% of workers age 45-54 and 33% of workers age 55-64.

  • More than half of today's households will not have enough retirement income to maintain their pre-retirement standard of living.

  • Among households age 55 and older, nearly one-third have no retirement savings.

Here are some fast facts about CalSavers:

  • A typical 25-year-old California worker who participates in CalSavers would be expected to have enough retirement savings to generate $7,060 in annual retirement income.

  • Almost 40% of CalSavers participants could delay claiming Social Security by a year or more, increasing their monthly benefit.

What can you do today? Make a plan to begin automatically saving money towards retirement. If you don’t have a retirement plan through your workplace, make sure to tell your employer about the mandate for CalSavers that begins in July 2019. In the meantime, set aside a sum of money each pay period that automatically goes to your savings account. Don’t have a savings account? Contact your bank - they will be happy to help you get started. Remember, something is better than nothing at all!

If you have questions about CalSavers, or would like to set up a presentation for your workplace about CalSavers - reach out to our United Way CalSavers specialist Isabel Sanchez at isanchez@uwiv.org or at 951.697.4700.

Kimberly Starrs