National Save for Retirement Week, which starts on Oct. 18 this year, provides a reminder that families in the United States face substantial and growing challenges as they work to build their retirement savings. The U.S. workforce relies heavily on employer-sponsored plans for retirement savings. In fact, the bulk of the money saved is accumulated through employers’ plans, and research shows that most workers who are offered a plan at work will use it to start saving. But nearly half of U.S. firms—and 70 percent of small businesses—do not offer any type of plan. In addition, many Americans who do have access to workplace plans or individual retirement accounts (IRAs) are not saving enough.
With this in mind, policymakers at all levels of government are proposing a growing number and variety of solutions. For example, Illinois is implementing a statewide retirement savings program that will require employers with 25 or more employees to automatically transfer a set amount from employees’ pay to a Roth IRA—unless a worker chooses not to participate. Adopting a different approach, the state of Washington will create a public website to serve as an online marketplace for voluntary retirement plans designed for workers at small businesses. Other initiatives are being considered in California, Connecticut, and Oregon. Meanwhile, Virginia and several other states have set up task forces to study what they can do to make it easier for people to save for retirement.
The Pew Charitable Trusts is researching the implications of these issues and possible approaches for employees, businesses, and taxpayers, because we believe that good data can inform good policy.