Washington, DC – Today, Senator Sheldon Whitehouse (D-RI) introduced legislation to help millions of Americans save for a financially secure retirement through an automatic payroll deduction Individual Retirement Account, or Auto-IRA. House Ways and Means Committee Ranking Member Richard Neal (D-MA) introduced companion legislation in the House earlier this year.
“Only half of American workers are able to save for retirement through their work. That means the other half is missing out on an important way to grow their nest egg,” said Whitehouse. “This bill would make it easier both for workers and for employers to set up and use a retirement plan. That would let more Rhode Islanders and people across the country enjoy greater financial freedom and security in their golden years.”
“All hardworking Americans should have easy, accessible ways to save for retirement,” said Neal. “I’m proud to work with Senator Whitehouse on this important legislation to help improve retirement security for folks in Massachusetts and throughout the country, provide peace of mind, and enable Americans to retire with the dignity they have earned.”
According to financial planners, the United States faces an impending crisis, with many Americans simply not saving enough for retirement. An estimated 30 million full-time, year-round workers have no employer-provided retirement plan or other opportunity to save through workplace contributions. A survey by the Employee Benefit Research Institute found that fewer than one in five Americans are fully confident they will have enough savings for a comfortable retirement.
The Automatic IRA Act offers a common-sense solution to expand Americans’ retirement savings. The legislation would require employers who do not provide another qualified retirement plan and who have 10 or more employees to enroll every worker automatically in an Auto-IRA unless the employee opts out. Employers could receive tax credits to defray the costs of setting up the accounts.
According to surveys by the Pew Charitable Trusts, almost 90 percent of small- to mid-size employers that are not currently offering retirement savings plans support the idea of Auto-IRA programs. Most employers support the concept because they believe it will help their workers.
The Auto-IRA concept, first developed by Brookings Institution and Heritage Foundation scholars, has garnered widespread support, including from the Women’s Institute for a Secure Retirement, the National Black Chamber of Commerce, AARP, and the Aspen Institute Initiative on Financial Security.
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