1. How Will State-Run Auto-IRAs Affect Workers?
- Author
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Aaron Yelowitz, Timothy F. Harris, and Kenneth R. Troske
- Subjects
0106 biological sciences ,Organizational Behavior and Human Resource Management ,010504 meteorology & atmospheric sciences ,media_common.quotation_subject ,education ,010607 zoology ,Affect (psychology) ,01 natural sciences ,Credit card ,Order (exchange) ,Scale (social sciences) ,Debt ,Survey data collection ,Demographic economics ,Default ,Business ,Geriatrics and Gerontology ,Basic needs ,Life-span and Life-course Studies ,health care economics and organizations ,Finance ,0105 earth and related environmental sciences ,media_common - Abstract
In order to encourage savings among workers without access to employer-sponsored retirement plans, several states have proposed defaulting workers into state-run individual retirement accounts known as Auto-IRAs. Plans such as OregonSaves automatically enroll workers and, by default, increase their contributions over time. Given low opt-out rates, these policies have the potential to increase retirement savings for workers without access to employer-sponsored plans. Using survey data, we find that over 24 million workers could automatically be enrolled in an Auto-IRA, if enacted on a national scale. Nonetheless, these policies have the potential to adversely affect individuals with debt and current financial difficulties who do not actively opt-out. One-third of potentially affected workers hold credit card debt with an average balance exceeding $5,000. Furthermore, approximately 15% of potentially affected workers have difficulty meeting basic needs.
- Published
- 2018
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