Colorado Secure Savings Program

Colorado is set to join a handful of other states in creating an automatic retirement savings program for Colorado workers. The idea is that while many Coloradoans have access to a retirement plan like a 401k or 457 plan through their employer, a lot of Coloradoans don’t. Unfortunately, those who do not have an employer sponsored retirement plan often do not start saving for retirement until much later than those who do. And, when it comes to retirement savings, time is lots of money.

What Is the Colorado Secure Savings Program?

The final Colorado Secure Savings Program won’t launch until at least 2023, but the rough idea is that each Coloradoan who works for an employer without a retirement plan will be automatically enrolled in the CSSP. The CSSP is actually nothing more than an IRA, or Roth IRA. What the program does differently is automatically create the retirement plan account and set the employee’s contribution to a specific minimum which will come from payroll deductions like a 401k plan.

People who don’t want to participate can opt out.

This plan could be a big retirement driver for Colorado workers over the long term. When I was a financial planner, some of my clients that were the best positioned for retirement weren’t necessarily the most savvy. Instead, many of them just said, “Yes,” years ago when someone asked if they wanted to set up a 401k plan as part of starting a new job, they stuck the money into the Total Market option and just left it there for 30 years. In the end they had 30 years of contributions and market growth and that added up to a lot more than some of the “savvier” investors who tinkered with contributions and investments. The CSSP is for them.

Now instead of a guy working a solid job with no retirement plan having nothing after 20 years, there will be a Roth IRA sitting there with his name on it.

(There’s another way the story plays out. Contributions to a Roth IRA can be withdrawn tax-free. Drop $5,000 a year into your account and in a few years, you will have a very solid down payment you can use. Maybe the real legacy of CSSP program will be two-fold. An increase in homeownership, AND better retirement savings for Coloradoans.

colorado secure savings program

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