More than 4,200 people have enrolled in Vermont Saves so far since the state launched the retirement savings program last year.
The program aims to help the estimated 80,000-100,000 Vermonters who don’t have access to retirement plans through their jobs. Women and people of color are more likely to fall into this category, as are young people, said Vermont State Treasurer Mike Pieciak.
"Because young people, potentially, are in the service economy," he said. "Maybe they're working at a restaurant, maybe in retail. It might not be their long-term career, but it's what they're doing now and they don't have access to retirement savings."
It's why Pieciak said he's pleased to see that people younger than 40 make up 55% of those enrolled in Vermont Saves, with 30% younger than 30.
"Why that's so important is because when you're so young and you're saving, it really grows and compounds quite substantially over time," he said.
As an example, Pieciak cited the average monthly savings in the program is $156. A 22-year-old putting that much away would have $540,000 by age 67, he said.
"You know, it's a significant amount of money built toward their retirement," added Pieciak.
According to a 2024 report by AARP, one in five Americans over the age of 50 has no retirement savings, and more than half worry they will not have enough money to last in retirement.
That same report shows Americans are 15 times more likely to save for retirement when they have access to a workplace plan, said Pieciak.
"That's what Vermont Saves is trying to do," he said.
How Vermont Saves works
The program is mandatory for employers in Vermont who have five or more employees and don't offer a retirement savings program of their own. There's no cost to enroll and so far, Pieciak said 1,100 employers have signed up. Self-employed individuals can also participate.
As of August, more than $2 million had been collectively saved, Pieciak said.
"So we're making meaningful progress and we're starting more outreach this fall to get even more employees participating," he said.
More: The state would help more Vermonters save for retirement with new bill
If your employer participates in the program, you’ll automatically be enrolled. If after 30 days you don't opt out, a default contribution rate is set at 5%. Your automatic after-tax salary deduction will then increase 1% annually until it reaches a maximum of 8%.
Your savings will be put into a personal Roth IRA (Individual Retirement Account) affiliated with Vermont Saves. Because Roth IRAs use after-tax contributions, earnings grow tax-free. You can set your savings rate to an amount that works best for you, or you can opt out at any time.
Confusion and pushback about the rollout
Some employees have complained online about the opt-out policy, saying money shouldn't be taken out of their paychecks without their permission.
Research shows opt-out savings programs increase the number of people saving and tend to be more inclusive than programs you need to opt into.
Pieciak said he's aware of the criticism, but feels the state has taken steps to help employers avoid confusion.
"It's a new program and not everyone is aware of it," he admitted. "But, there are a lot of things in the process to make sure that the employer and the employee are aware of what's going on.”
For instance, Pieciak said, “there’s a 30-day opt-out period and additional 30-day hold period, where your money is coming out of your paycheck, but being held in a very stable and secure money market account.” Only after that are your savings transferred to an investment account targeted to your retirement age, he said.
The state collects survey data from the small number of participants who do make earlier withdrawals, Pieciak said.
"The majority of people cite needing the money for an expense, and that's sort of the secondary impact of this program, is that it can act as an emergency savings account,” he said.
