State-facilitated retirement savings programs have reached a significant milestone, with more than 1 million accounts funded across 10 states as of March 31, 2025. These programs provide a crucial path for employees in small businesses to save for retirement, particularly in underserved areas and communities of color. Small business owners often find it challenging to offer retirement plans due to the costs and complexities involved.
However, state-facilitated programs enable employers to allow employees to direct a portion of their pay into an individual retirement account (IRA) with minimal administrative burden. Currently, 17 states have legislation for automated retirement savings programs, with 10 states having fully operational programs: California, Connecticut, Colorado, Delaware, Illinois, Maryland, Maine, New Jersey, Oregon, and Virginia.
State-facilitated savings milestone reached
These states collectively manage more than $1.93 billion in assets. The Center for Retirement Initiatives (CRI) reports growing employee engagement, with Oregon boasting the highest average contribution rate at 7.1% and the largest average account balance at $2,537. Beneficiaries can withdraw funds starting at age 59.5 or under emergent and exempted conditions, and the accounts are designed to be portable throughout employees’ careers.
These retirement programs not only aid in retirement savings but also offer small businesses a low-cost, simplified way to support their employees’ futures, enhancing their ability to attract and retain top talent. While reaching 1 million accounts is noteworthy, there are still 56 million U.S. workers without workplace retirement benefits. State legislators have an opportunity to address this gap by enacting similar retirement programs, which will help their constituents prepare for financial security in retirement.
Image Credits: Photo by Andre Taissin on Unsplash
