What’s up with OregonSaves?

A program designed to help Oregonians save for retirement is a great option, assuming your employer knows to sign up.

Update: I was interviewed on OPB about my experience with OregonSaves. You can read the article (and listen to my interview) on OPB’s website. I’ve also linked to the audio at the bottom of the article.

The statistics show it: you are more than 15 times more likely to save for retirement if you have a retirement plan through your work.

And that’s great, if your work offers a plan. But not every employer does. I’ve worked for multiple companies over the years that didn’t offer anything like that. And that was a drag, because the 401(k) is really an amazing thing. With its high contribution limits (over $20,000 per year!) and no income threshold, you really can’t beat it when it comes to piling away cash.

Oregon, my adopted home, has come up with a solution to this. For the over 1 million people in Oregon who don’t have a workplace retirement account, you can sign up for OregonSaves.

That is, assuming that your employer has signed up for it.

State-run retirement

OregonSaves is a voluntary retirement savings program administered by the State of Oregon on behalf of employees who work for companies that do not offer a retirement plan. (If your company offers a 401(k), this isn’t relevant to you.)

It’s done through payroll deductions, and is handled by the employer but without fees. The cost to the employee is 1% of assets per year. (More details here.)

Not a 401(k)

It should be noted in big bold letters that this isn’t a 401(k). It is, in fact a Roth IRA that employees will be signing up for.

If this is confusing to you, that’s understandable. The “I” in “Roth IRA” stands for “Individual”, as in, something you don’t do through work. So why is this happening through work, and why isn’t it a 401(k)?

I don’t have a solid answer on that, but presumably, it’s easier to administer a Roth IRA than a 401(k) and requires less administrative set-up. Also, with a Roth IRA, the money is yours at all times, and that might also help with sign-ups.

But really, these are just guesses. Maybe it’s a tax thing? I don’t know.

OregonSaves is good, and much better than nothing

So why bother with OregonSaves if it’s a Roth IRA? It’s a good question.

Looking at it from a purely pragmatic standpoint, there’s zero reason to use OregonSaves. Anyone can sign up for a Roth IRA at any time at any brokerage firm, like Vanguard or Fidelity. The Roth IRA you get there will have lower fees and have more investment options too.

But that’s not really the point. The point is that people aren’t signing up for Roth IRAs on their own. Many people don’t want to negotiate the financial services world at all, for lots of reasons. OregonSaves, and programs like it, allows people to have an easy on-ramp to the world of investing through their job, something most of us have to engage with whether we like it or not.

So in short, OregonSaves makes it easier to help people invest when they would be less likely to otherwise.

And it appears to be working, too. According to a report, as of June 2023, nearly 118,000 workers from more than 21,000 businesses in Oregon are using OregonSaves.

If you don’t live in Oregon, then fret not, as other states such as California, Connecticut, and Illinois have also been building their own state-run retirement plans with more to come.

Do employers know about OregonSaves?

While OregonSaves is a state-run program, employers need to be the ones to register, as they will be handling the paycheck deductions and other administrative tasks.

All employers in Oregon who don’t otherwise offer a retirement plan for employees are required to register, unless they qualify for an exemption.

But what if they don’t register? Good question.

The deadline for registration in Oregon is July 31, 2023.

Now, as a business owner in Oregon, I only recently learned about this deadline. Now granted, I don’t have employees, but I figured I’d have to file for an exemption or something.

But the only way I heard about this deadline was through a professional colleague.

I called the OregonSaves hotline and was told that they had no record of my business in their database, so—surprise!—there was nothing I had to do.

Now, I’m very certain I have a fully functioning business in Oregon. I asked if there was anything wrong with my registration, or if I could enter my business in, just to be on the safe side.

But no, I could do no such thing. I was, as the nice man said, “good to go”.

All of this makes me wonder how many other businesses in Oregon aren’t registering for OregonSaves because they don’t know they need to.

And that’s kind of funny, because it’s kind of like the whole problem with self-funding retirement accounts: people don’t sign up, because they don’t know how, or just don’t know that they need to.

If only there was some way we didn’t need to put the burden of retirement saving on the individual. Alas, until then, that’s what I help people figure out.

Update: I was interviewed on OPB

I was interviewed on OPB (Oregon Public Broadcasting, Oregon’s NPR affiliate) about this very issue. You can read the article on OPB’s website, or I’ve linked to the original broadcast audio below (My part starts around 2:23.) Very cool!

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