Automatic 401(K): Making Retirement Security Automatic

  • September 13, 2006

401(k) plans are becoming the most important tool for workers to secure their retirement security.

The Problem:

Access: Among the 153 million working Americans in 2004, only 49 percent (under 75 million) worked for a company that offered a 401(k) plan.

Lack of Participation: Out of all workers eligible to participate in a 401(k), only 79 percent chose to do so in 2004.

Starting to Save too Late: While the typical person joins the workforce around age 22, most do not begin to participate in a company sponsored retirement plan (like a 401(k)) until age 41.

Solution: Make a Great Idea Even Greater by Adding Automatic 401(k) Features

The core concept behind the automatic 401(k) is simple: utilize the power of inertia to promote rather than hinder saving. A 401(k) with automatic features increases participation, contribution rates, and asset accumulation.

Pew is no longer active in this line of work, but for more information visit the Retirement Security Project on