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Can We Increase Retirement Saving?

Workers today must save to gain a secure retirement. Failing to save assures a sharp drop in living standards when the paychecks stop, and ample evidence indicates that many Americans are not saving enough.

08. september 2016

This brief reviews studies by the Social Security Administration’s Retirement Research Consortium, and others, that assess government initiatives to increase retirement saving. The first section introduces the government’s traditional incentive – favorable tax treatment for employer plans and Individual Retirement Accounts (IRAs). The second section presents evidence on its effect. The third section reviews evidence on the effect of behavioral incentives, such as auto-enrollment, which the government encourages employers to use in their 401(k)s. The fourth section discusses state government initiatives, now under development, to expand access to workplace plans. The final section concludes that the most promising current initiative to increase retirement saving could be the state government programs to auto-enroll workers not covered by an employer plan into an IRA.