The lack of access to employer-sponsored retirement plans (401(k)) has been a significant challenge for nearly 57 million U.S. workers, but the introduction of state-sponsored auto IRAs is beginning to make a significant impact. These programs, which are now active in 10 states with more on the way, are helping workers start saving for retirement automatically.
- Growing Adoption: Since the first state auto-IRA program in 2017, 17 states have enacted such programs to help workers without access to employer retirement plans.
- Impressive Savings: Data from eight state programs shows that more than 900,000 workers have saved over $1.7 billion through auto IRAs.
- Increased Participation: Research by Gusto indicates that workers in states with auto IRAs are 20% more likely to save for retirement, with a 55% increase in savings rates among low-to-middle-income earners.
- Policy Effects: The programs often push more employers to offer their own retirement plans, likely spurred by new incentives and a recovering post-pandemic economy.
- Future Enhancements: Starting in 2027, some workers may also benefit from a federal savers’ match, potentially increasing the attractiveness of participating in auto IRAs.
State-sponsored auto IRAs represent a promising step toward addressing the retirement savings crisis, particularly for those least likely to have workplace retirement accounts. These programs not only encourage saving but also create a ripple effect, encouraging more businesses to offer their own retirement solutions.
