Over the years, Oregon has been both lauded and lambasted for new ideas, whether it be doctor-assisted suicide, public beaches or its bottle bill.
Now, it's breaking ground again. Oregon is the first state in the nation to help people save for retirement. “If you plan ahead, you’re just going to be set up for the future,” said Ulises Orozco, a 19-year-old sous chef at Thunder Island Brewery in Cascade Locks, Oregon. He makes about $20,000 a year.
This March 1, 2018 file photo shows 19-year-old sous chef Ulises Orozco. He contributes five percent of his paycheck to the new OregonSaves program.
Kristian Foden-Vencil / OPB
A couple of months ago, brewery owner Dave Lipps called a meeting to explain the company was going to put 5 percent of everyone’s wages into the OregonSaves pension program. They could opt-out if they wanted. But most didn’t.
Orozco said he's now putting aside about $75 a month.
“I haven’t really done that math, to be honest with you," he said. "I mean what Dave was telling me was in order to retire you would at least need $1 million in the bank to be saved ... I was like, maybe I should actually do the math and actually know how much I’ll get.”
Orozco has been learning about compound interest, something Albert Einstein allegedly quipped was the most powerful force in the universe.
Compound interest means that if you save $100 and earn 2 percent interest, it’ll be worth $102 in a year. The next year, it won’t just earn another $2 interest, it’ll earn $2.04 cents, because the interest is now earning interest.
The average Oregonian retiree has about $12,000 salted away.
It’s a nice lump sum if you’re looking to buy a car or fix a house. But spread over 20 or 30 years of retirement, it’s not a lot.
So, the state is rolling out the OregonSaves program for the one million Oregonians who don’t have a retirement savings plan at work. Those are mainly people with working class and part-time jobs.
“You know, for those employees who start now it’s going to be one of those decisions that they look back, hopefully 10 or 20 years from now and they say: ‘That was a great idea to do that,’” said Thunder Island Brewing owner Dave Lipps.
Kristian Foden-Vencil / OPB
The default setting under OregonSaves is that an employee's first $1,000 is placed in a savings account, so it won’t shrink if the stock market takes a plunge.
After that, the money is invested in stocks with employees choosing how aggressive they want to be.
The money is also portable, so people can carry it from one job to another.
Oregon State Treasurer Tobias Read thinks that in 20 or 30 years, the program will be a boon for the whole state.
"When people have access to savings as they retire, there is less of a stretch to our already stretched social safety net. So everybody has a stake in the success of this program," he said.
So far, around 70 percent of people who've been given the chance to join the OregonSaves program have signed up. And the pilot program went well enough that the state has decided to open it up to businesses of all sizes.
By 2020, nearly all businesses, other than sole proprietorships, will be required to either enroll in the OregonSaves program or offer their own retirement program.
But there is a fly in the ointment. Large employers aren't happy that they have to certify their retirement plans with the state every three years. Those employers filed a lawsuit, but Read said they're in settlement talks.
"The nature of our disagreement is a rather technical thing," he said. "I think it's safe to say that they recognize the retirement savings problem and have said complimentary things about the goal that we're seeking here."
Head chef Ron Phillips started saving 5 percent of his paycheck in the new OregonSaves program, but dropped it down to three percent after his rent and insurance bills increased.
Kristian Foden-Vencil / OPB
Back at Thunder Island Brewing, the lunch crowd is buzzing with hikers digging into burgers and beer. Despite the hours it took to set up, owner David Lipps is happy he enrolled in OregonSaves.
“For those employees who start now, it’s going to be one of those decisions that they look back, hopefully 10 or 20 years from now and they say: ‘That was a great idea to do that,’” he said.
Head Chef Ron Phillips has told 19-year-old sous chef Ulises Orozco not to mess with his new account. He's told him to, "set it and forget it."
But Phillips hasn’t managed to follow his own advice.
“I got that news about my rent going up. I got the news that my insurance was going up," Phillips said. "Well, I have a budget so I lowered (the retirement account) down to 3 percent from 5."
Phillips said he is planning to bring it back up to 6 percent this summer.
That may be enough money for him when he plans to retire around age 70 — as long as he leaves it alone.
“If I use it for anything, I’d use it for a down payment on a house. And that would be the only time that I would touch it," he said.