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. 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.