Starting in 2017, Illinois will require businesses with at least 25 employees to offer a retirement plan at work.  Employees will be automatically enrolled in individual retirement accounts, funded through a 3 percent deduction from their paychecks (although they can opt out).

The employers’ administrative burden will be limited to making the payroll deduction, similar to the ones they already take for taxes — employers will not have to help fund the plans themselves.  Costs will be paid by savers, who will be charged up to 0.75% of their balances (a pretty average expense ratio — and not as low as Vanguard’s, who I tend to recommend to clients trying to save for retirement).

Apparently, access to a plan that operates by payroll deduction enormously changes participation, from almost zero to over 50% — even though IRAs are widely available to individuals, easy to set up, and can be simple to fund with automatic bank direct debits.

However, as the article puts it perfectly, “it’s not enough to have a retirement account; you need to get enough money into the account to live on in retirement, and for most Americans, Social Security plus a retirement account funded by 3 percent of wages won’t produce enough savings.”  Still, it’s a step.

Illinois Introduces Automatic Retirement Savings Program, a First for the Nation – NYTimes.com.