In the United States, a staggering number of citizens – nearly 48% – face retirement without the security of a workplace retirement plan, such as a pension or a 401(k). This alarming statistic, sourced from the University of Pennsylvania's Pension Research Council, highlights a critical gap in retirement preparedness. However, a solution is emerging: state-run auto-IRA programs. These innovative initiatives, already adopted by states including California, Colorado, and Oregon, are making significant strides in addressing this issue.

The Challenge: Bridging the Retirement Savings Divide

The lack of retirement savings is a growing concern, particularly as studies indicate that access to a workplace plan increases the likelihood of saving for retirement by 15 times, a number that rises significantly with automatic enrollment. This savings deficit not only affects individuals but also poses a future financial burden on state governments. The Pew Charitable Trusts projects a staggering $334 billion rise in state spending due to inadequate retirement savings between 2021 and 2040.

The Solution: The Rise of Auto-IRAs

Auto-IRA programs represent a proactive approach to this challenge. These programs mandate companies without existing retirement plans to offer a state-managed Roth IRA option or facilitate payroll deductions into it. Typically, workers contribute 3-5% of their paycheck automatically, though they can opt out. The impact is notable: over 800,000 workers are already participating, saving an average of $165 monthly, as reported by The Pew Charitable Trusts.

A growing number of states have recognized the urgent need for improved retirement savings options, especially for workers without access to employer-sponsored plans. This has led to the implementation of state-run auto-IRA programs, a significant move towards ensuring financial security for millions. These innovative programs allow for automatic payroll deductions, making retirement savings more accessible and straightforward. Here's a look at the states at the forefront of this retirement savings revolution:

  • California's CalSavers: A pioneering program offering an easy way for Californians to save for retirement.
  • OregonSaves: Oregon's trailblazing initiative helping workers save directly from their paychecks.
  • Illinois Secure Choice: Illinois' answer to the retirement savings crisis, providing a straightforward savings solution.
  • Connecticut's MyCTSavings: A program designed to bolster retirement savings among Connecticut's workforce.
  • MarylandSaves: Maryland's approach to ensuring its residents have a secure financial future.
  • Colorado SecureSavings: Colorado's innovative program aimed at enhancing retirement readiness.
  • Furthermore, states like New York, Delaware, and New Jersey are also in the process of developing their auto-IRA programs, reflecting a nationwide trend towards addressing the critical issue of retirement savings.


Each of these state-run auto-IRA programs is tailored to meet the unique needs of their residents, offering a mix of ease, accessibility, and financial security. This shift towards state-facilitated retirement savings is a key step in addressing the long-standing issue of inadequate retirement savings in the U.S., particularly among small business employees and gig economy workers. With the expansion and success of these programs, more states are expected to join this movement, significantly impacting national retirement readiness.


Key Benefits of Auto-IRAs:

Enhanced Retirement Savings: Even modest contributions can accumulate into a significant retirement fund over time.

Overcoming Inertia: Automatic enrollment simplifies the process, helping individuals overcome procrastination in saving.

Access to Emergency Funds: Roth IRAs offer the flexibility of penalty-free withdrawals for immediate needs.

Greater Financial Security: Increased savings can lead to a more secure retirement and reduce dependence on public assistance.


Considerations and Limitations:

Contribution Caps: IRAs have lower annual contribution limits compared to 401(k)s.

Absence of Employer Match: Unlike 401(k) plans, these programs don't include employer contributions.

Limited Eligibility: Not all workers, like those in gig economy roles, are covered.

Variability in Programs: Each state's auto-IRA program may have different rules and features.



The Future Outlook: Auto-IRAs as a Vital Step

Auto-IRAs are not a complete solution, but they represent a vital step forward in enhancing the retirement readiness of millions of Americans. By empowering individuals and reducing financial strain on state budgets, these programs are paving the way towards a more financially secure future for many. With more states considering and refining these programs, their impact on national retirement security could be transformative.