More and more states are creating state-facilitated retirement savings programs, which give employees in small businesses a path to putting money away for retirement that they otherwise would not have. As of March 31, 2025, these programs reached a milestone of more than 1 million funded accounts administered across 10 states.
Under the current landscape, many small businesses are unable to offer retirement benefits because they do not have the financial resources and the administrative capacity to do so. This challenge is even more glaring in underserved areas, including communities of color. However, studies have shown that employees are more likely to save for retirement if they can do so through payroll deductions.
Through these state-facilitated programs, employers can give their employees the opportunity to elect to have a portion of their pay go into an individual retirement account (IRA). For small business owners, the paperwork to sign up is minimal and administering this program is as easy as adding another line to payroll deduction. To date, 17 states have enacted laws creating automated retirement savings programs, with 10 fully up and running in California, Connecticut, Colorado, Delaware, Illinois, Maryland, Maine, New Jersey, Oregon, and Virginia.
The data compiled and shared by Georgetown University’s Center for Retirement Initiatives (CRI) showed that these states have at least one million accounts holding more than $1.93 billion in assets administered. The CRI is a repository for state program performance data and in looking closer at the numbers, employee engagement appears to be growing with time. For example, Oregon’s program is the oldest of all 10 and it has the highest average contribution rate at 7.1% and the largest average funded account balance with $2,537. Beneficiaries can withdraw funds starting at the age of 59.5 or for emergent and exempted needs and these accounts will stay with employees across their careers.
In addition to creating a path to saving for retirement, these programs give small businesses a low-cost, low-hassle way to help their workers put money away for the future. This in turn will help them to be more competitive in recruiting and retaining quality talent in the same way larger businesses that are able to provide these types of benefits are already doing.
While the milestone of 1 million accounts is significant, there are still 56 million workers in the U.S. who do not have workplace retirement benefits. State lawmakers across the country can fill this void and help their constituents by passing legislation to create state-facilitated retirement programs.
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