How State Programs Help ‘Move the Needle’ on Retirement Plan Coverage

Retirement readiness is growing, and state-facilitated retirement savings programs are part of the reason, says a just-released study. 

The Georgetown University Center for Retirement Initiatives (CRI), in conjunction with Econsult Solutions Inc. (ESI) and with support from the American Retirement Association, has issued the report “Who Lacks Access to Retirement Savings? The Benefits of State-Facilitated Retirement Savings Programs.” It provides a comprehensive look at retirement savings access across the United States, as well as a look at some of the state programs that are under way. 

The long and short of it is that state-run programs add to the progress made by employer-sponsored retirement plans (ESRPs). Employer plans are available to a majority of employees, and state-run programs bolster the effort to help individuals achieve a stable and secure retirement. This study offers a fresh look at the importance of both. 

“This research confirms what we’ve long advocated for at the American Retirement Association — that expanding access to workplace retirement plans is critical for America’s financial future,” said Will Hansen, Chief Government Affairs Officer at the American Retirement Association, in a press release. He continued, “The success of state-facilitated programs, alongside the landmark SECURE 2.0 Act provisions, demonstrates the power of public-private partnerships in closing the retirement coverage gap, but more work needs to be done. We’re encouraged by this momentum and remain committed to supporting innovative solutions that strengthen retirement readiness nationwide.”

Key Results

Key findings in the study include:

• Just over half — 53% — of U.S. private-sector full-time and part-time workers over age 18 have access to employer-sponsored retirement savings plans.
• More than 23 million gig economy workers lack access to workplace retirement options.
• The need for more retirement plan coverage is more acute among employees of small businesses with fewer than 50 employees — 37% of their employees have access to employer-provided plans.
• The number of people age 65 and older in the United States is projected to grow by 34% between 2020 and 2040, from almost 56 million to approximately 75 million; at the same time, for 23% of those households Social Security furnishes at least 90% of their income.
• A worker without access to an employer-sponsored retirement plan could benefit from an auto-IRA program combined with the Saver’s Match; such coverage could augment Social Security benefits in a significant way.

The State of Things

“Private sector workers are much more likely to save for retirement if they have access to employer-sponsored retirement savings plans,” says the report. But how many do have access? 

Access to ESRPs. Employers are not required to offer retirement plans, but many do; a majority, in fact. The CRI study says that overall, in 2023 there were 125.6 million full-time and part-time employees age 18 and over in the United States, and 53% of them have access to an ESRP. And that means that almost 67 million employees have access to workplace retirement savings plans or programs.

Size matters. The broad data about access to plans is only part of the story. The CRI researchers also found that employer size matters. 

The dividing line by which they defined what constitutes a large employer and a small employer was 50 employees, and they found that large employers — those with more than that number — were far more likely to offer an ESRP. 

Employer Size	Number of Employees	Employees with Access to an ESRP	Percentage of Employees with Access to an ESRP
Large	70,079,000	46,154,000	66%
Small	55,515,000	20,392,000	37%

More to Be Done. Those statistics indicate good news — a majority of employees overall, and a strong majority of large employers are saving. Nonetheless, they also show that many are not. 

The report adds that many workers have “alternative work arrangements” — they are part of the “gig economy.” And such workers, they note, are not employed in the traditional way by employers that have been the primary way workers access health and retirement benefits. Such workers lack access to ESRPs, and the researchers argue that their access to a way to save for retirement is “an increasingly important policy consideration.”

The researchers employ demographics to further illustrate the importance of bolstering retirement plan coverage. They observe that University of Virginia researchers project that the population of those age 65 and older in the United States will grow 34% between 2020 and 2040 to almost 75 million. Further, they note that ESI found that in 2023, 23% of elderly households rely on Social Security for 90% of their income — and they add that those benefits average $23,150 per year.

The Saver’s Match

The CRI report suggests that the new federal Saver’s Match has “the potential to boost retirement savings and income for millions of Americans and help supplement Social Security benefits.” And it observes that the Saver’s Match provides “additional support” for those with low and middle incomes — including those who save through state programs. 

And in the States 

The researchers observe that, in the absence of national action, many states have put in place their own retirement programs to expand access to retirement plan coverage. Many of them have set in place auto-IRA programs, which require employers not already offering retirement savings plans to enroll their employees in an individual retirement account (IRA).

State-facilitated retirement savings programs “provide a simple pathway for workers without employer-sponsored plans to save for retirement,” says the report, and “make saving easy and automatic while giving workers full control to adjust their contribution levels or opt out at any time.” 

And state plans increase the likelihood that the workers in those states will save for retirement, says the CRI. The report cites 2024 research that found that workers in states with auto-IRAs are 20% more likely to save for retirement. Further, that research found that state plans may help address the effects of 37% of employees of small businesses having access to an ESPR — it says that in states with auto-IRA plans, the largest gains in savings occurred among those who work for small employers and among workers earning below median income.

Such programs currently exist in 20 states, with more state legislatures considering bills that would create them in their states and expand the universe of such plans. The report says that the state plans in existence create a new opportunity for almost 21 million employees to save. 

The Early Adopters 

To get a closer look at state programs and efforts to build retirement security, the study looks at where things stand in each state regarding retirement readiness and access to ESRPs. And it takes a close look at California, Illinois, and Oregon — the first three states to adopt their own retirement programs to cover private-sector employees whose employers do not offer a plan.

California. Established in 2019, by December 2024 CalSavers had assets of $1.11 billion and provided access to retirement plan coverage to 913,000 full-time and part-time private-sector employees in the Golden State who had lacked it. 

Illinois. Launched in 2018 (but not operative that year), by December 2024 Illinois Secure Choice had assets of $224 million and provided access to retirement plan coverage to 265,000 workers in the Land of Lincoln who had lacked it. 

Oregon. Launched in 2017, by December 2024 OregonSaves had assets of $329 million and provided access to retirement plan coverage to 234,000 workers in Oregon who had lacked it. 

Serving as a Catalyst

Not only do state plans have a direct effect on retirement plan coverage, the report points out, they also “indirectly contribute to new private sector employer plan formation” by serving as a catalyst for private-sector employers that do not offer a plan to adopt one; that means, they observe, that “even more workers” are covered by a retirement plan of some sort. 

To illustrate that effect, the researchers report that the three states that were the first to establish their own plans to cover employees whose employers did not — Oregon, Illinois, and California — not only have seen “meaningful program participation,” they also have seen “increased private sector plan formation,” and that those results are “beginning to help close the access gap in those states.” The report cites research in 2024 that estimates that more than 30,000 private-sector employers adopted ESRPs in those three states:

• California: 27,908 employers with 5-99 employees
• Oregon: 2,211 employers with 5-99 employees
• Illinois: 1,360 employers with 16 to 99 employees 

And in those states, that translated to coverage for thousands of employees:

• California: 629,000
• Oregon: 36,000
• Illinois: 96,000

Broader Implications

The researchers point out that, not only does increasing individuals’ retirement savings and income benefit them, but it also has broader positive effects as well. Boosting workers’ retirement security, they say, benefits the economy at large due to the stronger savings, investment, and economic growth it fosters. Further, they argue that boosting individuals’ retirement readiness reduces fiscal pressure on governments to support an aging population. 

Finding Out More

The report is available here.