State Automated Savings Programs

Eight in 10 small-business owners in Massachusetts support creation of a state-facilitated retirement savings program that would help private sector workers who don’t have plans through their jobs put money away for retirement, according to a survey conducted from July to September 2023 for The Pew Charitable Trusts.

Retirement security is largely dependent on people saving money through a plan provided by their employer, but millions of Americans lack access to this important benefit. Research shows that workers are 15 times more likely to save for retirement if they can do so through payroll deduction, but many small businesses are unable to offer retirement benefits due to high startup costs and a lack of administrative capacity.

Automated savings programs, intended to help private sector workers put earnings away for their retirement, hit a major milestone in November: Cumulative account assets across the seven state programs topped $1 billion.

Almost half of Americans aged 18 to 64 who work in the private sector lack access to a workplace retirement savings plan. The most common reason employers give for not having started a plan is that they view setup to be too expensive and burdensome

Although most Americans save for retirement through employer-provided plans, 56 million private sector workers lack access to such an opportunity to save at work. Many employers, particularly small businesses, find themselves unable to provide retirement benefits because of high startup costs and limited administrative capacity. And that leaves state governments grappling with a critical question: What happens when their residents don’t have enough money to retire?

A new study finds that Americans’ insufficient retirement savings will significantly affect every state and the federal government over the next 20 years, resulting in increased public assistance costs, reduced tax revenue, decreased household spending and standards of living, and lower employment.