Star Tribune
Minnesota’s auto-IRA can help workers save for retirement even without employer plans
The standard advice when saving for retirement is: “Start early and save regularly” to harness the power of compound interest.
Yet many Americans have saved little for retirement, and that’s not because they’re financially illiterate. Instead, about half of the private-sector workforce works for companies that don’t offer a retirement savings plan. Few workers save without one, and that’s a major reason why about 30% of retired households solely rely on Social Security for income. The lack of access to an employer-sponsored retirement plan is concentrated among lower-wage workers without college degrees.
Several administrations of both parties have proposed initiatives to expand coverage nationally, but the efforts have gone nowhere. Frustrated at the lack of progress, eight states stepped into the breach and created auto-IRAs, and at least eight more states are in the wings, including Minnesota. The Secure Choice Retirement Program — Minnesota’s auto-IRA — should become effective next year.
The state auto-IRA plans share a similar model, although the details can differ. Employers without a retirement savings plan must auto-enroll employees in an IRA (often a Roth-IRA). Workers can opt out of it. There is no company match. The default after-tax contribution rate is 5%. The first $1,000 goes into a money-market fund. Contributions above that threshold invest into an age-based target date fund.
Will these state-sponsored plans make a difference? Yes, at least according to a paper presented at a recent retirement conference in Washington, D.C., by two economists from Boston College. They took the basic auto-IRA blueprint, made some assumptions and peered into the future. One baseline number: Median household assets in 401(k)s and the like at ages 51-56 are zero on average among employees with high school or less education. (The study offers projections for workers by education. I’m focusing on less-educated employees.)
They assume about one-third of this group will opt-out. Participants who cycle in and out of the program and use the money for emergencies will accumulate a median balance at ages 51-56 of more than $25,000. The same group would have almost $44,000 with no withdrawals. These modest sums are better than zero. Workers from this cohort who are continuously enrolled throughout their careers in the program accumulate sizable balances.
Making sure all workers have access to a retirement savings plan at work matters, especially early in their career so they can take advantage of compound interest.
Chris Farrell is senior economics contributor, “Marketplace”; and a commentator for Minnesota Public Radio.
DULUTH — A Duluth man who said he doesn’t remember killing his girlfriend pleaded guilty to second-degree murder without intent Tuesday in St. Louis County court — a plea deal that could land him in prison longer than sentencing guidelines would dictate.
Dale John Howard, 25, told Judge Theresa Neo that he doesn’t remember it but believes he caused the death of his girlfriend, Allisa Marie Vollan, 27, on March 22. Vollan, described on a fundraising site as a “bright young lady” with “an abundance of friends,” had a no-contact order against Howard at the time of her death. Howard could be sentenced to 20 years in prison — more than seven years longer than Minnesota’s presumptive guideline for the murder. According to the county attorney’s office, the longer sentence is legal because of the active domestic abuse no-contact order against him.
Howard’s sentencing is scheduled for Oct. 14.
According to court documents, officers responded to a morning call at Howard’s Central Hillside apartment and found him beneath a blanket with Vollan, who was dead. He told officers that he had hung out with Vollan late the previous night, then left to meet friends at a bar, and Vollan went to sleep in a guest room. When he tried to move her into his bedroom the next morning, she wasn’t breathing. He called his father, who was at the apartment when Duluth police arrived.
Neighbors in the upper level of the duplex told officers that, in the time before Howard would have left for the bar, they heard a woman crying and an angry male voice. They heard muffled moaning, thuds and the sound of something being dragged. They recorded it.
A preliminary autopsy by the Midwest Medical Examiner’s Office found that Vollan had likely been smothered.
Earlier the same month, Howard had been arrested after neighbors saw him repeatedly slam Vollan’s head into a door. The no-contact was issued by a St. Louis County judge.
Minneapolis School Board Member Fathia Feerayarre, who represented District 3 in the city’s center since January 2023, has resigned effective immediately, the district announced Tuesday.
Her departure comes too late to add the seat to the November ballot, however, meaning her colleagues will have to appoint her successor in a process and under a timeline to be outlined next week.
Feerayarre ran unopposed in 2022 as part of a four-candidate slate endorsed by the Minneapolis DFL and the Minneapolis Federation of Teachers, and was set to serve until Jan. 4, 2027.
Board Chair Collin Beachy, who also was part of that four-person slate, said in a news release: “I thank Ms. Feerayarre for her service to the Minneapolis Public Schools community as a member of the school board. We all wish her the best in her future endeavors.”
Minneapolis School Board Member Fathia Feerayarre, who represented District 3 in the city’s center since January 2023, has resigned effective immediately, the district announced Tuesday.
Her departure comes too late to add the seat to the November ballot, however, meaning her colleagues will have to appoint her successor in a process and under a timeline to be outlined next week.
Feerayarre ran unopposed in 2022 as part of a four-candidate slate endorsed by the Minneapolis DFL and the Minneapolis Federation of Teachers, and was set to serve until Jan. 4, 2027.
Board Chair Collin Beachy, who also was part of that four-person slate, said in a news release: “I thank Ms. Feerayarre for her service to the Minneapolis Public Schools community as a member of the school board. We all wish her the best in her future endeavors.”
