State Rep. Mike McFall (D-Hazel Park) speaks with colleagues on Wednesday, Feb. 14, 2024, at the Michigan Capitol.

LANSING, Mich., Feb. 21, 2024 — State Rep. Mike McFall (D-Hazel Park) introduced House Bill 5461 today, which will expand retirement savings options in Michigan and allow employees to save for retirement even if their employer does not offer a program to do so. As of 2020, nearly 42 percent of Michigan’s private-sector workforce ages 18 to 64 lacked access to a retirement savings plan at work.

“We continue to see an aging workforce that is not financially secure enough to retire,” said McFall. “This program will help small businesses retain employees, allow for more Michiganders to have additional financial autonomy in retirement, and save tax dollars because fewer people will need to take advantage of social safety net programs as they age. The program comes at no cost to employers and will help our state continue as an economic driver in the nation.”

Fifteen states across the nation have already created automated savings programs, also known as “secure choice” or “work and save” programs. These programs automatically enroll workers without workplace retirement benefits into individual retirement accounts (IRAs) in which a portion of their wages is set aside every pay period. Along with the freedom of choosing when and how much they contribute, individuals can always decide to opt out of the program. Furthermore, participating employees can access their savings in cases of financial emergencies or setbacks without penalty.

“Like many businesses in our state, ours is a family-run business. While working closely with our family has many positives, it also has its drawbacks, including being so small that we aren’t able to provide a company retirement savings plan. An automated savings program geared toward small businesses would not only be a huge win for our business, but it would also help my family save for our futures. The Iverson family is hopeful that our elected officials will consider making this important program a reality for families and businesses like ours,” said Detra Iverson of Love N Labor Botanicals Farm in Detroit.

“Millions of workers across the country — and 1.5 million in Michigan — are struggling to save enough for retirement simply because they lack access to workplace savings,” said John Scott, director of The Pew Charitable Trusts’ retirement savings project. “MI Secure Retirement is an innovative and practical solution, with no costs for employers, to address the challenges workers face in preparing for retirement in this economy.”

MI Secure Retirement is designed to support small businesses as well as employees. Retirement benefits play a major role in making or keeping employers attractive but can be cost-prohibitive for small businesses. This program offers support for members of both entities.

“In an AARP survey, most small business owners (79%) agree that being able to offer a portable retirement savings program helps them attract and retain quality employees and stay competitive, yet nearly 6 in 10 do not offer their workers a way to save for retirement,” said Paula Cunningham, AARP Michigan State Director. “If we can make it easy for more workers to save through payroll deduction, workers will build savings, small businesses will benefit, and taxpayers will save money.”

Insufficient retirement savings can drive older Michiganders to rely on social assistance programs, which is expensive for the state. Pew estimates that Michigan’s cost from insufficient savings, chiefly Medicaid costs, will total $11.2 billion cumulatively from 2020 through 2040. Additionally, the federal tax cost to Michigan from insufficient retirement savings will total an estimated $37.3 billion over the same 20 years. Implementing “MI Secure Retirement” legislation is crucial to give greater access to retirement savings for individuals, help establish generational wealth, provide small businesses a tool to retain employees, and save tax dollars.