In the ongoing transformation of retirement planning in the United States, a collaborative effort is gaining traction to make retirement security accessible to all, especially those traditionally underserved. This nationwide movement, driven by state-sponsored auto-IRAs, federal legislative proposals and innovative private-sector initiatives, underscores a commitment to bridging the retirement savings gap for small employers and part-time basis employees.

As part of CI’s ongoing research, both for our subscription-based monitor research services and our custom work, our researchers track potential legislation and industry news on key topics and trends. Here are some of the latest when it comes to retirement savings programs for underserved workers:

State-sponsored auto-IRA programs and federal efforts

The heart of this collective initiative lies in the growth of state-sponsored auto-IRAs for retirement. These programs represent a modernized approach to retirement savings, designed to simplify the onboarding process by automatically enrolling eligible employees, and streamlining the enrollment and contribution process. The aim is to overcome barriers that often deter individuals, particularly those in part-time positions, from actively participating in retirement savings plans.

With 21 states, a wave of change is sweeping across the nation. These state-level endeavors exemplify a proactive approach, directly addressing the void in retirement options and paving the way for federal change. The Georgetown University Center for Retirement Initiatives offers an interactive 2023 State Program Information Map, which showcases various implemented programs and offers insights into diverse models. California’s CalSavers program represents one such auto-IRA program that is currently active. The program requires participation from employers with five or more employees that do not sponsor a retirement plan. The plan is “opt-out,” and automatically enrolls eligible employees with a 5% savings rate that, if participants do nothing, goes into an age-appropriate target-date fund in a Roth IRA.

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California’s CalSavers program homepage

At the federal level, synchronized efforts are underway, guided by significant proposals and legislative actions:

  • Internal Revenue Service (IRS) Proposed Rule on Part-Time Eligibility: The IRS has proposed a rule aimed at clarifying part-time eligibility requirements for retirement plans.
  • SECURE 2.0 Act Provisions: Building on the success of the original SECURE Act, SECURE 2.0 introduces key provisions to enhance retirement access. Notably, the federal matching contribution program replace the current Saver’s Credit program. This new program allows eligible workers to match up to 50% of their contributions to a maximum of $2,000 per person. Those eligible can select which accounts will receive the contribution. Alternatively, for those with contributions below $100, the payment will apply to their tax return or tax liability. The Saver’s Match—along with other SECURE 2.0 provisions—will go into effect in 2026.
  • Helping Young Americans Save for Retirement Act: This forward-looking legislation seeks to lower the minimum age requirement for plan participants from 21 to 18, addressing a crucial gap in retirement access for younger workers. By allowing individuals to start saving earlier in their careers, the act will help bolster long-term financial security for the next generation.
  • Retirement Savings for Americans Act: Originally introduced in 2022 and featured in the ongoing legislative discussions, the Retirement Savings for Americans Act is designed to establish an automatic individual retirement program for low- and middle-income workers. The 2023 version of the bill features contribution limit matching regular IRAs, post-tax contributions, a 1% automatic match, and a potential 4% tax credit match subject to income-based phase-out. Administered by the Department of the Treasury, the program would automatically enroll participants at 3% of their income, with the choice to opt-out or increase contributions.
  • Health Access Legislation: Two bills proposed by the House Ways and Means committee—The HSA Modernization Act and HSA Improvement Act—aim to make health expenses more affordable and expand the use of Health Savings Accounts (HSAs). The HSA Improvement Act allows individuals using certain health services, like worksite health clinics, to contribute to an HSA or transfer a Flexible Spending Account (FSA) into an HSA. It also enables individuals with spouses having an FSA to open their own HSA. Simultaneously, the HSA Modernization Act raises HSA contribution limits and expands eligibility for various groups, including veterans, working seniors on Medicare, Native Americans and those previously ineligible due to health benefit plans.

Private sector innovations, projected costs and urgency

In the private sector, firms are taking bold steps to create innovative long-term savings solutions. BlackRock has introduced a target-date exchange-traded fund (ETF) designed to offer a long-term, cost-effective savings solution. This ETF adapts to an investor’s risk tolerance as they approach retirement, providing a personalized and dynamic investment option. SoFi has launched an IRA matching program, encouraging both active and automated IRAs. This program matches contributions up to the annual limits, offering individuals a straightforward way to boost their retirement savings. Similarly, the online brokerage firm Robinhood has introduced an IRA with an automatic 1% match with a cap of $6,000. These initiatives go beyond traditional employee benefits, extending their reach to gig workers and individuals without conventional retirement plans. The emphasis on personalized, cost-effective and automatic savings solutions aligns with the broader national push.

This screenshot shows a promotional image from SoFi's blog
SoFi IRA Matching Promotional Image

Central to this collective endeavor is the stark projection of over $1.3 trillion in costs between 2021 and 2040 due to the absence of comprehensive retirement savings plans. These financial imperatives underscore the urgency of the situation, emphasizing the potential strain on government finances, the risk of increased public expenditure and the broader economic impact.

As the United States rallies around a shared vision of inclusive retirement and health access, the multi-faceted approach through auto-IRAs, federal legislation and private sector innovation is creating a powerful synergy. State-sponsored auto-IRAs for retirement, spearheading the movement, lay the foundation for a potential federal initiative that could redefine retirement and health planning for the entire nation. Endorsements from firms like DoorDash and Uber underscore the significance of this movement, especially for gig workers who have traditionally faced barriers in securing their financial future and accessing affordable healthcare.

The nationwide push for inclusive retirement and health access is not merely a policy shift but a collective commitment to ensuring every individual, regardless of employment type, has the opportunity to build a secure financial and health foundation for their future.

Subscribers can learn more about retirement planning on our client portal. Learn more here about CI’s research for plan sponsors, plan participants and workplace finance programs. Or contact us to learn what our custom research and benchmarking options can do for your organization.

Sebastian Fritsch

Sebastian Fritsch is an Analyst on CI's retirement and workplace finance team.