We want to help North Carolinians save for retirement. This bill does it smartly | Opinion

Nearly half of North Carolina’s private sector workers don’t have a retirement savings plan through their employer, making it harder to save for retirement. New legislation in the North Carolina General Assembly would fix that, creating a statewide plan that workers can put a little bit of each paycheck into, invested and managed out of the state treasurer’s office.

It’s a commonsense way to help people live better lives without adding another obligation on small business owners.

House Bill 79 and Senate Bill 110 — bills called North Carolina Work and Save — essentially set up a 401k plan for people without 401ks. The proposal builds wealth and creates a new perk for businesses that may have few employees and don’t need the administrative work — or the potential thousands of dollars a year in bank fees — needed to set up these accounts.

We’re among this proposal’s dozens of bipartisan sponsors because it’s an excellent idea. Twenty other states already have similar programs, and they’ve been successful, which is why groups like the AARP are championing the proposal here.

If workers opt in, some of each paycheck is invested through automatic payroll deductions. The state treasurer’s office, which is already responsible for investing the state’s $127 billion pension plan for state employees, would guide the investment strategy, through a public-private partnership, to help these accounts grow.

Those savings would typically go into a Roth IRA, which grows tax free. Under the U.S. tax code you can invest up to $7,000 a year in a Roth IRA, and even if the companies you invest in grow tremendously over the life of your investment, you pay $0 in taxes on that growth.

After owning a home, this sort of investment may be the greatest wealth builder available to American families, but the ability to make automatic deductions through a workplace plan — that’s the key.

A 2023 study by the Employee Benefit Research Institute found that 65% of people with a workplace plan had $100,000 or more saved for retirement. Those without a plan established by their employer? Only 11% had those savings.

This access is uneven. According to a national AARP study, roughly 75% of workers without a high school degree don’t have an employer-provided retirement plan. About 78% of workers at companies with fewer than 10 employees don’t have one. And 65% of workers at companies with 10 to 24 employees don’t have one.

Even among companies with more than 1,000 workers, one-third of employees don’t have access to an employer-sponsored retirement plan. All of this adds up to nearly half of North Carolina’s private sector employees not having access.

The disparity is even sharper in the rural parts of our state. A national analysis of Census data found that workers in rural areas have roughly half the savings of people in urban areas. That’s a wealth gap of nearly $55,000 per family.

This doesn’t just impact families, it impacts all taxpayers. A 2023 Pew study calculated that insufficient retirement savings will cost both the state and federal government more in increased Medicaid and other public assistance costs, as well as reduce tax revenue. The study estimated those costs at $964 billion for the federal government over 20 years and an additional $9.9 billion for North Carolina’s state government.

The N.C. Work and Save legislation would help people help themselves without adding administrative red tape for business owners.