State Auto-IRA Programs Are Minting First-Time Savers, Report Finds

State-run automatic IRA programs have enrolled more than 1.2 million private-sector workers whose employers offer no retirement plan, according to a report released Monday by the Retirement Security Lab at Georgetown. Two-thirds of participants had never held a retirement account before enrollment.

The programs, now operating in nineteen states, require employers without their own plans to route payroll deductions into state-facilitated Roth IRAs. Workers are enrolled by default at 5 percent of pay and can opt out at any time; about 70 percent stay in. Average account contributions run $105 a month — modest sums that compound into meaningful balances over a working life.

The design leans on behavioral economics rather than mandates on workers: inertia, which for decades kept people out of saving, now keeps them in. Participation rates among workers earning under $30,000 — the group traditional retirement policy has most consistently failed — exceed 60 percent.

Advocates say the findings strengthen the case for a federal auto-IRA covering the roughly half of private-sector workers with no workplace plan, a proposal that has circulated in Congress for a decade. State treasurers of both parties testified in support of a national framework last spring, citing economies of scale in program administration.

The report also flags unfinished work: balances remain small, leakage through early withdrawals is real, and self-employed workers stay largely outside the system. But as a proof of concept, researchers argue, the verdict is in — when saving is the default, people save.