The Georgetown University Center for Retirement Initiatives (CRI) is dedicated to thought leadership and developing innovative approaches to retirement savings, investment, and lifetime income. ESI worked with CRI on a study that addresses the significant and growing gap in access to retirement savings in the United States. ESI developed an analysis of national options to expand retirement savings coverage, examining how characteristics such as account type (payroll deduction IRA vs. 401(k)), whether an employer is required to participate, and how default levels of employee and employer contributions drive access, savings, asset growth, and retirement income over time.
Modeling was undertaken on several policy scenarios, selected based on the range of state programs and national proposals, to understand their impacts on retirement savings participation, savings, and government expenditures and revenues. Regardless of the model selected, the study concludes that the benefits to savers, retirees, and the nation’s fiscal and economic well-being can be enormous.
Regardless of the model selected, the study concludes that the benefits to savers, retirees, and the nation’s fiscal and economic well-being can be enormous. The approaches analyzed would result in significant expansions of access and participation among the estimated 57.3 million private sector employees who are not offered any workplace retirement plan today.
Depending on the design features, a national approach to universal access to retirement savings which would require some or all employers to offer their workers either an IRA or 401(k) could: increase the number of workers saving for retirement in the year 2040 by 28–40 million, with participation from about 50–70% of private sector workers who currently lack access; help a young worker with a modest income who starts saving early and follows savings defaults for 40 years to save enough to generate as much as $14,320 in additional annual income for retirement, increasing to $21,300 in annual income if eligible to take advantage of a refundable Saver’s Credit; increase cumulative total retirement savings between $1.4 trillion and $1.9 trillion by the year 2040; and, accelerate economic growth, increasing national GDP by $72 billion to $96 billion in the year 2040.
ESI provided a formal final report, infographic summaries for all 50 states, and presented the findings with CRI during a study release webinar.