The retirement gap is real and states are stepping up.
In the U.S., millions of workers — especially those employed by small businesses, nonprofits and gig platforms — lack access to a retirement plan through their jobs. In fact, 25 percent of all workers had no access to either a 401(k) or pension at work in March 2024, according to the Bureau of Labor Statistics.
For lower income workers, the disparity is great: Only 54 percent of workers earning the lowest wages had access to a retirement plan, while 92 percent of workers earning the highest wages had access to a plan.
With no 401(k) and no employer match, millions of Americans are largely left to figure out retirement planning on their own. That’s where automatic IRA programs come in.
These state-run initiatives are designed to give workers a low-barrier, automatic way to save for retirement, even if their employer doesn’t offer a plan.
More states are launching auto-IRA programs every year, and the early results are promising. If the trend continues, retirement savings might not be tied to your employer anymore — it could be tied to your ZIP code.
Let’s break down what these programs are, which states offer them and how you can get started even if your state doesn’t offer an auto-IRA yet.
More than half (57 percent) of American workers feel behind on their retirement savings, according to Bankrate’s Retirement Savings Survey.
Which states offer auto-IRAs?
As of January 2025, 13 states have active auto-IRA programs — California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, New Jersey, Oregon, Vermont, Virginia and Washington — according to data from Georgetown University’s Center for Retirement Initiatives. Several other states are in the process of bringing auto-IRA programs online.
In the past few years, this idea has gained traction. Throughout 2024, more than half the states in the country took action toward joining the movement. A total of 27 states introduced bills aimed at either launching new programs, expanding or tweaking existing ones, or setting up study groups to figure out what a program could look like in their state.
If your state isn’t on the list yet, it might only be a matter of time. Historically, one or two new states create an auto-IRA program every year, according to Georgetown’s research.
It’s easy to see why these plans have grown so popular since Oregon launched the first auto-IRA in 2017. Lawmakers want to help residents build wealth, reduce reliance on social services later in life, and give small businesses a way to offer something they otherwise couldn’t afford.
How do auto-IRAs work?
Auto-IRAs are retirement savings programs run by states that automatically sign up eligible workers unless they choose to opt out.
Under such programs, the state collects payroll information from companies without employer-sponsored plans, then the state notifies workers that their paychecks will start contributing to an auto-IRA unless they say otherwise.
Most people are enrolled with a default contribution rate of around 3 to 5 percent of their paycheck, which gets funneled into a Roth or traditional IRA managed by an investment company. The accounts are owned by the workers, not the state or employers.
What makes auto-IRAs powerful is that they remove friction. You don’t need to fill out a stack of paperwork or figure out what kind of account to open — everything is done for you unless you decide to opt out. Contributions come straight from your paycheck, which makes it easy to stay consistent with dollar-cost averaging.
For 2025, the contribution limit for auto-IRAs is the same as regular IRAs: Up to $7,000 per year, or $8,000 if you’re 50 or older.
Your employer’s role is minimal. They’re not matching contributions like they would with a 401(k). All they do is facilitate payroll deductions. That makes it attractive for small businesses that can’t afford the administrative cost or overhead to manage a traditional retirement plan.
Most auto-IRA programs offer a short list of investment choices, usually target-date funds. These funds are designed to automatically shift your investment mix over time — starting out heavier on stocks when you’re younger, then transitioning to more bonds as you approach retirement. They’re meant to be hands-off, so even if you know nothing about investing, you’re still accumulating wealth for your future.
Another perk: These accounts are portable, so if you switch jobs, your IRA stays with you. Some states even boost your savings rate automatically every year unless you opt out of that too.
Why these auto-IRA programs matter
Auto-IRAs solve a longstanding problem: Many Americans are behind on retirement savings.
According to a recent Bankrate survey, 22 percent of Americans said their biggest financial regret was not saving early enough for retirement. And when you don’t have access to a retirement plan at work, the chances of saving decrease significantly.
Auto-IRAs aim to change that by making saving the default. And it’s working. Data from the Center for Retirement Research at Boston College shows that the number of funded accounts in these programs has grown substantially — from 50,000 in 2019 to nearly 1 million by the end of 2024. These accounts hold contributions totaling $2.4 billion, according to Georgetown.
About 248,000 employers have registered with state auto-IRA programs and approximately 71,000 have submitted payroll deductions in the last 90 days, according to Georgetown University’s Center for Retirement Initiatives.
Critics initially worried these state programs might discourage employers from offering their own retirement plans.
According to recent research from The Pew Charitable Trusts, there’s no sign that auto-IRAs are pushing out private retirement options. In fact, the opposite seems to be happening. Research from Georgetown shows that many businesses actually start offering employer-sponsored retirement plans in response to auto-IRA policies — suggesting auto-IRAs are sparking more participation across the board, not less.
In other words, auto-IRAs are getting more people to save for retirement without encroaching on what’s already there.
What to do if your state doesn’t have an auto-IRA
If you don’t live in one of the states offering an auto-IRA — and your employer doesn’t offer a retirement plan either — you’re not out of luck. You can still open an IRA yourself. It takes about 10 minutes and all the major brokers offer IRAs with low minimums and no fees.
The two main types of IRAs are traditional and Roth.
- A traditional IRA lets you deduct contributions from your taxable income, giving you a tax break now, but you’ll pay taxes when you withdraw money in retirement.
- A Roth IRA lets your money grow tax-free and you can take it out tax-free later in retirement.
Roth IRAs are generally considered the most flexible retirement plan out there. That future tax-free income can save you money, especially if you expect to be in a higher tax bracket down the road. Roth IRAs also don’t come with mandatory withdrawals, known as required minimum distributions (RMDs), once you hit a certain age, unlike traditional IRAs.
If you’re ready to set up an IRA, look for a broker that offers low fees and a solid range of investment options.
Fidelity, Charles Schwab and Wealthfront are popular choices, and they all cater to beginners. Most will offer some version of a target-date fund or low cost index funds, so you don’t have to spend hours researching and hand-picking specific investments.
Opening an IRA — especially if you don’t have access to a retirement plan at work — is a smart move. The earlier you start saving, the more time compounding has to work its magic on your returns. And if you’re in your 20s, 30s or even 40s, there’s still a lot of runway ahead.
Nearly half (49 percent) of workers with a retirement goal in mind say it’s likely they’ll be able to save that much, down from 52 percent in 2023, according to Bankrate’s Retirement Savings Survey.
Bottom line
For the millions of workers without access to a 401(k), auto-IRA programs offer an opportunity at financial security later in life. But even if you don’t live in one of the 13 states where these plans are available, you can still open an IRA on your own and start contributing.
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