If your employer does not offer a 401(k) or other retirement plan for employees, you are not alone.

For example, in Connecticut, my home state, more than 600,000 private-sector employees do not have access to an employee-sponsored retirement savings plan.

On a nationwide basis, 57 million Americans (nearly half of the private sector workforce aged 18 to 64) work for companies that do not provide retirement plans, according to a 2022 AARP Public Policy Institute fact sheet (tinyurl.com/2s3sr7xb). If you focus on smaller companies (fewer than 10 employees), about 78% lack access to a retirement plan.

Sixteen states want this to change. California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Vermont, Virginia and Washington have enacted programs for private-sector workers, with nine of these states having active programs, according to Georgetown University's Center for Retirement Initiatives (tinyurl.com/474jt7f3).

In California, which had a full statewide launch of its program in July 2019, there were more than 420,000 funded accounts in the CalSavers Retirement Savings Program at the end of April 2023 (tinyurl.com/y4dpjrds). In Illinois, the Secure Choice program, which launched in 2018, had more than 122,000 funded accounts as of April 30, 2023 (tinyurl.com/m8ta7vme).

Keep in mind that each state has different rules.

Connecticut employers with more than five employees (who make $5,000 a year or more in taxable wages) are required to provide a retirement plan, either directly on their own or through MyCTSavings, a program run by the Connecticut Office of the State Comptroller (tinyurl.com/2p8nwyb3). Employers have until Aug. 31, 2023, to set up the plan. The Connecticut state legislature is currently considering implementing penalties for noncompliance, according to Madi Csejka, spokesperson for the Connecticut Office of the State Comptroller.

Once employees are enrolled in the plan, MyCTSavings automatically deducts 3% of gross pay and deposits those funds into a Roth IRA account in the employee's name (tinyurl.com/2knrs6r7). Employees contribute post-tax dollars instead of pre-tax dollars (401(k)s are typically pre-tax contributions).

One complication is that an employee will need to review the Roth IRA contributions he makes on his own to compare with the MyCTSavings payroll deductions. Why? To make sure he doesn't overfund his Roth IRA for the year. The Roth IRA contributions he makes on his own together with the MyCTSavings payroll deductions cannot exceed the IRS annual maximum, which for 2023 cannot be more than $6,500, or $7,500 if you are age 50 or older.

Likewise, Roth IRAs are not available to you if your modified adjusted gross income (MAGI) is above certain limits (see tinyurl.com/2eje9w4f). For example, if you are single and your MAGI is less than $138,000, you can contribute up to the limit. However, if your MAGI is equal to or greater than $153,000, you cannot contribute anything.

The participation in MyCTSavings is voluntary for employees but mandatory for employers. However, there is no requirement (or mechanism) for an employer to make an employer contribution.

You, the employee, can opt out at any time.

MyCTSavings has a standard investment option, where your contributions go into a cash preservation fund for the first 60 days after the initial contribution, and then a target retirement date option for any existing savings and any future contributions. Other options can be viewed at tinyurl.com/mrds8hhu.

Plan participants pay for administrative and operating expenses through a $26 yearly account fee, which is billed at $6.50 quarterly, along with a yearly asset-based fee of approximately $0.26 for every $100 in their account (tinyurl.com/t7d4ka32).

If you are a Connecticut employer who hasn't set up a MyCTSavings Employer Account, the quickest way to get going is to use this resource: tinyurl.com/abybw8vx.

The phone number for additional help is 1-833-811-7435, and the email is clientservices@myctsavings.com.

If you are one of the millions of Americans whose employer does not offer a retirement plan, you may have another option -- provided your state has created one. Be sure to check the National Association of State Treasurers' map of participating states (tinyurl.com/ywj42a5f).

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When the U.S. government spends more than it collects in revenue, it creates a "deficit," which the Treasury Department covers by borrowing money when it issues new debt through government securities, according to U.S. Government Accountability Office (tinyurl.com/2p8prcpj).

There is a limit to what the Treasury can borrow, known as the "debt ceiling" (or "debt limit"), and that's the problem that we're facing today. We reached that limit ($31.4 trillion) on Jan. 19 of this year, according to the Congressional Budget Office (tinyurl.com/ysxwfpw8).

Six days earlier, Treasury Secretary Janet Yellen wrote to congressional leaders (tinyurl.com/4r62asj3) that the Treasury Department "will need to start taking certain extraordinary measures to prevent the United States from defaulting on its obligations."

While it's not possible to predict an exact date, Yellen anticipates that a potential default (the "X-date") might occur next month. On May 1, she told congressional leaders: "[O]ur best estimate is that we will be unable to continue to satisfy all of the government's obligations by early June, and potentially as early as June 1, if Congress does not raise or suspend the debt limit before that time" (tinyurl.com/7aav54vf).

If the debt ceiling is not raised before the X-date, "the government may also have to prioritize its principal and interest payments on Treasury securities to head off a default, and delay payments to U.S. households. That could affect Social Security, military salaries, tax refunds, food stamp benefits and unemployment insurance, among other programs," explained Michael Zesas, head of U.S. Public Policy Research for financial services firm Morgan Stanley (tinyurl.com/mu457a3v).

History tells us that this state of affairs is nothing new. If you look back to the end of World War II, we've lived through 102 modifications of the debt limit, according to the Congressional Research Service (tinyurl.com/me44tsk6) -- even in a contentious year such as 2011. That's the year Standard & Poor's cut its credit rating for U.S. Government debt from AAA to its current rating of AA+. The change in credit rating "unnerved U.S. financial markets for a time, but they quickly recovered," quoting a Capital Group investment insight article (tinyurl.com/4tuznd56).

"I think the lesson from 2011, and a subsequent debt ceiling impasse in 2013, is that these events can disrupt markets for a while -- sometimes even weeks or months -- but if we look at history, they don't tend to have a lasting impact on investors," said Matt Miller, a Capital Group political economist. But, of course, Congress must act.

So here we are. Should we be worried about T-bills becoming worthless? What if the government can't make good on Social Security payments? What if federal employees can't get paid?

Some say a default could have "similar macroeconomic consequences to the Great Recession": a 4% decline in the gross domestic product, nearly 6 million jobs lost and an unemployment rate of 7%. (The Committee for a Responsible Federal Budget, a nonpartisan organization, citing a Moody's Analytics report (tinyurl.com/45h4ea68).)

Others say a default won't occur, pointing to history and the nature of congressional decision-making.

There is hope for a solution soon: "We have discounted the possibility of a prolonged impasse lasting more than a week. The economic damage would be so severe, in terms of higher unemployment and economic recession, that it beggars belief that Congress would not respond," quoting a report by UBS Financial Services (tinyurl.com/3d7ncbra).

Where does all of this put you, the investor?

You'll have to decide the best course of action for yourself, since your situation is unique to you. If you are working with a financial professional, now is the time to make sure you are in sync on how your investments are being managed and how different types of risks are considered.

As for one approach, "Stability and safety have always been, and will continue to be, our top priority in helping Fidelity customers plan for -- and live in -- retirement," said Rita Assaf, vice president of retirement at Fidelity Investments. "To this end, we are engaging with our customers to educate them on the debt ceiling, reinforcing the importance of having a financial plan."

My best advice: Have a realistic risk management plan that takes into account your investment time horizon and anticipates both good and bad markets, including a congressional delay, or even the unthinkable, a potential default.

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Given the recent turmoil in the banking industry, with two U.S. banks being taken over in March of this year (tinyurl.com/mrx7kdwn), it's a good time to review the Federal Deposit Insurance Corporation's coverage to make sure you understand what is and what isn't covered.

You can find the FDIC's rules of coverage at tinyurl.com/2uj9vfw2. The types of deposit accounts that are covered include checking accounts, savings accounts, money market deposit accounts and certificates of deposit.

A key factor involves the amount of coverage. As the FDIC states, "The standard deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category."

"Per insured bank" means that if you have a checking account at one bank and a savings account at another bank, each is covered up to $250,000.

"Account ownership" categories, especially at the same bank, might cause some confusion. The FDIC offers examples of a single account (accounts in one name) and joint accounts (accounts in two or more names), along with other types of accounts, to explain the insurance coverage (tinyurl.com/yj2z5zaw). The examples are helpful to get an understanding of how the coverage works -- and what to watch out for.

To avoid surprises, use EDIE, the FDIC's Electronic Deposit Insurance Estimator (tinyurl.com/mpsnuyhf). It can help you determine "how the insurance rules and limits apply to a depositor's specific group of deposit accounts -- what's insured and what portion (if any) exceeds coverage limits at that bank." You can input the details of your accounts at a given bank and the amount in those accounts. Once all the details have been put in, you can calculate the insurance coverage for the accounts.

(Be aware that rule changes will take effect on April 1, 2024, for revocable and irrevocable trusts and mortgage servicing accounts -- see tinyurl.com/ycktanew for more details.)

Also important is what FDIC insurance does NOT cover. That includes stock and bond investments, annuities, life insurance policies and safe deposit boxes and their contents. (As for cryptocurrencies, the FDIC explains in a fact sheet that it "does not insure assets issued by non-bank entities, such as crypto companies" (tinyurl.com/3zy5fz9p).)

To make sure your bank is covered by FDIC insurance, use the FDIC's BankFind tool, which allows you to find FDIC-insured banks and their branches (tinyurl.com/ywmxsh6n). When you get a result from the tool, the information will include if and how long the bank has been FDIC insured. Make sure you have the correct spelling and proper spacing for your bank's name.

Credit unions are not FDIC insured. Instead, the National Credit Union Administration (tinyurl.com/3b3f2tsx) insures more than 4,700 U.S. credit unions (tinyurl.com/4fhxwz9n). The insurance coverage is similar to the FDIC's (which has more than 4,680 insured banks as of April 21, 2023), but make sure to review the details if you have a credit union account.

What happens to your accounts when an FDIC-insured bank does fail?

The FDIC has two roles (tinyurl.com/4pts9efx):

As the insurer of bank deposits, "the FDIC pays insurance to depositors up to the insurance limit. Historically, the FDIC pays insurance within a few days after a bank closing, usually the next business day."

-- As the receiver of the failed bank, "the FDIC assumes the task of selling/collecting the assets of the failed bank and settling its debts, including claims for deposits in excess of the insured limit."

Learn more by watching FDIC videos about deposit insurance coverage at tinyurl.com/yckvk6p3.

Finally, it helps to know that since the FDIC began insuring deposits in 1934, "no depositor has lost a penny of FDIC-insured funds as a result of an insured bank's failure."

That's good news, of course. But, realistically, you may still be at risk. Take the time now to understand your personal coverage. Are you fully insured?

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