A Hawaii Retirement Savings Program Is In Hawaii’s Best Interest - Honolulu Civil Beat

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About the Author

Kealii Lopez

Kealii Lopez is the state director of AARP Hawaii, a nonprofit, nonpartisan organization dedicated to empowering Americans 50 and older to choose how they live as they age. Her career spans more than three decades and includes executive and leadership positions in government, nonprofit and business organizations.


For Bess Press owner Buddy Bess, creating a retirement savings program that small businesses can offer access to for their employees “seems like a no-brainer.”

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Bess Press is a local publisher and bookseller based in Kaimuki. Like many small businesses, Bess Press isn’t able to offer workers a retirement savings program because they’re too busy running a business to research and figure out how to do so.

So Senate Bill 3289, which would act on the recommendation of a legislative task force and create a Hawaii retirement savings program, seems like an ideal solution. The bill, which passed the Senate unanimously last week, is up for a House Labor and Tourism Committee hearing Thursday.

About half of private-sector workers, most of whom work for small businesses, cannot save for retirement at work through payroll savings — the most effective way to save. If money is taken out of your paycheck before you get a chance to spend it, more people will save.

I know this from personal experience. I’ve lived paycheck to paycheck and spent every dollar every month. If I didn’t have employers take money out of my paycheck, I doubt I would have retirement savings. Now that I see what the retirement amount is, I am doing even more to save.

SB 3289 would create an automatic IRA savings program, similar to programs in Oregon, California and Illinois.

The OregonSaves program has been operating since 2017. California launched CalSavers in 2019. So far, 441,000 workers have saved more than $407 million as of last month in those three programs. In California, a high cost-of-living state, the average participant makes $25,000 a year and saves $150 a month.

The program is a public-private partnership similar to college 529 savings programs. The state creates the program and appoints a board to oversee it. But private financial services firms hold and invest the money in Roth IRA accounts.

The accounts stay with the worker if they change jobs, and because it’s a Roth IRA, the principal can be taken out without penalty and used for unexpected needs. Traditional IRAs could also be an option as the program is established.

House floor session.
Senate Bill 3289 will be heard Thursday in the House Labor and Tourism Committee. Cory Lum/Civil Beat/2022

It’s not just workers who will save. Future taxpayers — our children and grandchildren — will save too if SB 3289 passes.

A study done for the Legislature’s Retirement Savings Task Force found that the state is spending $56 million this year and will spend $1.72 billion over 20 years on government health care and other programs for kupuna without adequate savings. If we can get more people to save, we can make a significant dent in this future spending and reduce the number of kupuna who will retire into poverty.

When Paychecks Run Short

Some lawmakers believe low-income workers can’t afford to save. I know from personal experience that this is not true. I grew up in public housing in my elementary school years, and my family didn’t make much money. We scrimped when my father’s paycheck ran short and ate a lot of instant ramen.

My father eventually got a job with the federal government, and it included a pension that he contributed to from his paycheck. My mom and dad got better with their finances as they saw their savings grow. It eventually enabled them to build a home in Nanakuli on Hawaiian Homelands.

Because of this home purchase and my dad’s pension, my mom can continue living in her home and age in place. However, pensions are mostly a thing of the past now, making savings with payroll deduction even more critical.

Future taxpayers — our children and grandchildren — will save too if SB 3289 passes.

In other states, nearly 70% of workers take advantage when offered access to an easy way to save with these new retirement savings programs. The program is voluntary, so those who have savings through a spouse or partner and those who feel they can’t afford to save can decide not to participate.

The main opponents to SB 3289 are financial services companies that continue to maintain the status quo and fight to prevent a low-cost and easily accessible state-facilitated retirement program from being made available to over 200,000 Hawaii workers and their families.

In reality, experience in other states shows that creating a state-facilitated auto IRA program has led to an increase in business for companies that sell retirement savings programs.

Not every business wants to go with a less comprehensive state program, and sales of new savings plans have actually increased in California and Oregon since CalSavers and OregonSaves launched. Indications are sales are up in Illinois as well.

We thank House Labor Chair Richard Onishi for scheduling a hearing today and encourage him to pass SB 3289 out of his committee. Even if it passes out of Labor, it still has a long way to go before becoming law. Past attempts to create a Hawaii retirement savings program have passed the full House only to die in conference committee.

We are asking supporters to call or email your House representative at action.aarp.org/hisaves and let them know that it’s time to join other states in helping workers save their own money for a financially secure future. The alternative is higher taxpayer spending and kupuna living in poverty, and no one wants that.

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About the Author

Kealii Lopez

Kealii Lopez is the state director of AARP Hawaii, a nonprofit, nonpartisan organization dedicated to empowering Americans 50 and older to choose how they live as they age. Her career spans more than three decades and includes executive and leadership positions in government, nonprofit and business organizations.


Latest Comments (0)

Why should somebody else be responsible your retirement? Is personal responsibility a bad thing?

7HH7 · 8 months ago

Setting up a whole new State bureaucracy to administer this boondoogle is not in the State's best interest when the Federal 401-K plan is under used by the population. Let's see some numbers on the % of population without a 401-K and the cost to administer a state plan.

zz · 8 months ago

The whole 401k is a disaster. I had a 401k and wish I had paid the income tax as I earned it. At least I would have known what my tax rate was. The way it is now the government allows you to not pay taxes on the money until you are retired and need the money. You won't know what the tax rate will be until you take money out. Think of it as a loan ( of your own money) that you don't know the % rate. Try getting a loan from the bank an ask them what the rate is going to be and they tell you never mind I'll tell you when you want to take out some money. This may work for some people but most of us will lose a good portion to taxes. No if s and or but's about it. please correct me if I am wrong

mrmike38 · 8 months ago

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