I love to read stories like this. Pie in the sky I call it written by someone who has little idea of what they are talking about. Start with the phrase “low-income families and households of color” Why doesn’t low income suffice to describe those who struggle with financial shocks. Are they saying solid middle class households of color can’t handle their money? I hope not, that’s an insult.

What they are saying, of course, is that workers are not very smart. Anyone so motivated can walk into a bank, set up an IRA with direct deposits from their pay or accounts. Your own auto-IRA. Oh yeah, you may need a bank account.

By the way a similar scheme was tried at the federal level under the Obama administration, it was a flop and then discontinued.

On one hand we see a problem linking health insurance to employment, but doing so for saving for retirement is okay?

I’m trying to figure out the connection between insufficient retirement income and “lower employment” I would think the effect would be the opposite.

Tax and penalty free? Perhaps they mean free of state taxes, but taking money early from an IRA is not tax and penalty free at the federal level.

For millions of Americans, an unexpected expense or a sudden loss of income can severely impact their household’s balance sheet. In fact, each year more than half of U.S. households experience at least one financial shock, such as a major medical bill, and many are unable to cover those expenses. These financial shocks can be even more difficult for low-income families and households of color, who often have fewer resources to cushion against financial adversity.

Some people withdraw money from their retirement savings to make up the difference. Retirement savings, of course, are important not just as a last-resort source of income to pay for unanticipated expenses: Their primary purpose is to help employees prepare for their retirement. Yet millions of workers, and at least one-third of private sector employees, don’t even have access to retirement plans at their jobs.

One innovative way to solve this problem: the growing number of state-facilitated retirement savings programs.  These programs, known as auto-IRAs, allow employees to automatically contribute their own earnings to an individual retirement account (IRA) through voluntary payroll deductions and can be a vital lifeline for workers. They can also ease a state’s financial burden, which ultimately benefits taxpayers.

Consider Pennsylvania. A 2018 study found that employees’ insufficient retirement savings have led to every county in the Keystone State experiencing increased public assistance costs, reduced tax revenue, decreased household spending and lower employment.

The price tag for Pennsylvania taxpayers of these savings deficiencies? An estimated $15.7 billion over 15 years. Now, forward-thinking Pennsylvania policymakers are working in a bipartisan manner to pass Keystone Saves, a state-facilitated retirement savings program.

If passed, Keystone Saves would give more than 2 million private sector workers access to an auto-IRA plan. Participants could withdraw their voluntary contributions at any time, tax-and penalty-free — especially helpful in an emergency.

Source: State-sponsored retirement savings programs could be a lifeline for US workers | TheHill

I don’t now how the catch phrase, low-income is defined here, or why it’s relevant to the story because truly low income workers [**] may not have the wherewithal to use an IRA in any case.

It all boils down to individual motivation and responsibility- like most things in life.

[**] The easy answer is to defer to the U.S. government: The term “low-income individual” means an individual whose family’s taxable income for the preceding year did not exceed 150 percent of the poverty level amount. In the U.S., that’s roughly $19,000 (it’s slightly higher in Hawaii and Alaska). Mar 18, 2021