With the future of Social Security in question and a dangerous shortfall in many Americans' savings, five states are testing out bold and controversial legislation to get people to put away more for retirement. The new laws could give much-needed financial options to one in five Americans, opening the door to similar experiments in other states—depending on who gets elected in November.
Connecticut, Illinois, Maryland, and Oregon have all passed laws requiring employers to either offer their own retirement plans or seamlessly connect workers to a well-designed state plan. California is considering a similar scheme. When these plans are in place (the first will take effect next year, at the earliest), retirement experts hope they’ll become laboratories to improve the American 401(k).
"Because different states are trying different approaches, state plans can be the innovation labs for better retirement," said Joshua Gotbaum, a guest scholar at the Brookings Institution and former head of the U.S. Pension Benefit Guaranty Corp. "They can—and I think, will—create new options for gig workers, for portability, for lifetime income, and for getting better coverage at lower cost."