--- title: Americans Aren’t Saving Enough for Retirement — and All Taxpayers Might End up Paying for It description: Americans aren't saving enough for retirement, but state automated savings programs offer a solution to help with a $1.3 trillion shortfall. authors: - name: Brenden Rearick role: Reporter url: https://money.com/author/brenden-rearick/ bio: Brenden Rearick is a former reporter at Money who specialized in covering breaking news and enterprise stories about credit cards, real estate, investing, and personal finance trends. education: University of Pittsburgh, BA at_money_since: 2023 articles: 133 covers: - Retirement - Banking - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Housing - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Shopping - Taxes - Technology former_staff: true editors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Retirement - Banking - Business - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Shopping - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true fact_checkers: - name: Matt Ryan Webber url: https://money.com/author/matt-ryan-webber/ at_money_since: 2022 articles: 7 covers: - Retirement - Banking - Business - Credit - Investing former_staff: true published: '2023-09-26T15:41:09.000Z' modified: '2024-04-17T13:49:57.000Z' section: Retirement tags: - News word_count: 704 canonical: https://money.com/retirement-savings-shortfall-state-automated-ira/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Retirees lounging poolside with a dollar bill superimposed on top](https://img.money.com/2023/05/News-Program-helps-solve-retirement-savings-gap.jpg?crop=0px%2C0px%2C2880px%2C1620px&quality=85) Millions of Americans aren't putting away enough money for retirement, and the massive shortfall may wind up costing the country as a whole. Right now, even millionaires fear that they'll [burn through their retirement savings](https://money.com/millionaires-outlive-retirement-savings/), and most folks are [creating retirement goals](https://money.com/retirement-savings-goals-calculations/) off their top of their heads. A colossal shortfall in retirement savings is shaping up to be a financial burden that will ultimately affect all taxpayers. Retirees, taxpayers and both the federal and state governments will suffer at the hands of the looming retirement crisis that [research from Pew Charitable Trusts](https://www.pewtrusts.org/en/research-and-analysis/articles/2023/05/11/state-automated-retirement-programs-would-reduce-taxpayer-burden-from-insufficient-savings) released earlier this year says will cost over $1.3 trillion by 2040. However, the non-governmental organization suggests that there's an underutilized solution that could relieve much of the burden: state-run individual retirement accounts, or [IRAs](https://money.com/what-is-an-ira/), which could help workers [save for retirement](https://money.com/save-for-retirement/) and enable the government to avoid covering the hefty shortfalls. These programs would allow private employers without the means to create their own retirement savings programs to offer employees an automated IRA. As it stands, only 11 states have adopted these programs. ## Begin benefiting from an IRA account from JP Morgan ### It's never too late to open an account for your retirement. Select your state to begin contributing today. [Start Investing](https://money.com/pr/u13c0ba77418?ap_referrer=%2Fretirement-savings-shortfall-state-automated-ira%2F) ## Massive retirement savings shortfall The Pew Charitable Trusts' study suggests that over the next couple of decades, older Americans are not going to have enough money to last through retirement, and the shortfalls will be a massive burden on the government. The report finds that over 56 million privately-employed Americans lack access to retirement savings programs through their jobs. "Limited savings could lead to a cumulative additional cost to the federal government of $964 billion between 2021 and 2040," the report estimates. It adds that state governments will be cumulatively burdened by $334 billion over the same time span. These sizable costs are what governments would need to pay to properly address a boom in public assistance demand if things continue as they are. Pew says that this demand would also lead to an increased burden on taxpayers due to decreasing revenues and a drop in quality of life for retirees. What's more, the Pew Trusts estimate that the ratio of retirement-age households to working-age households will grow by 46% between now and 2040. This means that the burden of this $1.3 trillion shortfall will be borne by a smaller population of working-age taxpayers. According to Pew, "the study estimated the cumulative additional taxpayer liability because of insufficient retirement savings to be $13,600 per household." ## Make your retirement plan work for you by investing in a Roth IRA ### Roth IRAs allow you to save money for retirement, while providing the flexibility that traditional retirement plans lack. Click below to learn more. [Start Investing](https://money.com/pr/ub41a2014241?ap_referrer=%2Fretirement-savings-shortfall-state-automated-ira%2F) ## How auto IRAs can help This data may seem bleak, but as the Pew Trusts point out, there is a solution being undertaken by some states: automated savings programs, or automated IRAs. Some private employers, especially small businesses, are not able to offer employer-based retirement savings options like [401(k)s](https://money.com/what-is-a-401k-rollover/) due to high administrative and financial costs. Auto-IRAs take automatic payroll deductions from employees and roll them into a retirement savings plan that bears no cost on the employer. Employees are typically automatically enrolled in these programs, though they can easily opt out. The research estimates that the average worker need only put aside an extra $140 per month over a 30-year period to help offset the retirement savings gap and largely erase this $1.3 trillion crisis. As it stands now, [11 states](https://crsreports.congress.gov/product/pdf/IF/IF11611) (and the city of [Seattle, Washington](https://money.com/best-places-to-travel/seattle-washington/)) have implemented auto-IRAs. Four of these states have already seen average monthly savings grow to or above $140 per month. If households could save this much in retirement accounts, "they could erase the retirement savings gap, eliminate the extra taxpayer burden, and help people maintain their lifestyles in retirement," the Pew report states. Pennsylvania is not among the states who have an auto-IRA program, though a bi-partisan group of lawmakers is trying to bring one to the Commonwealth. The proposed [Keystone Saves Program Act](https://www.keystonesavescoalition.org/en#:~:text=State%20Automated%20Savings%20Programs,-Quick%20View&text=Also%20known%20as%20auto%2DIRAs,a%20no%2Dcost%20retirement%20benefit.) would make Pennsylvania the twelfth state to offer an auto-IRA. According to the Keystone Saves Coalition, an interest group trying to bring auto-IRAs to the state, and that also includes the Pew Charitable Trusts as a member, says the proposed auto-IRA program would help the state to reduce an estimated $17.8 billion windfall it will be tasked with paying over the next 17 years. ![](https://s3.consumersadvocate.org/prd/image/image/22145/medium_add8dc72-0c71-4e11-a480-2e2335612296.png) Begin setting up an IRA with SoFi® today! [Start Investing](https://money.com/pr/ze4c74e74bbd?ap_referrer=%2Fretirement-savings-shortfall-state-automated-ira%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/retirement-savings-shortfall-state-automated-ira/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Retirement", "item": "https://money.com/retirement/" }, { "@type": "ListItem", "position": 3, "name": "IRAs", "item": "https://money.com/iras/" }, { "@type": "ListItem", "position": 4, "name": "Americans Aren’t Saving Enough for Retirement — and All Taxpayers Might End up Paying for It" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/retirement-savings-shortfall-state-automated-ira/#webpage", "url": "https://money.com/retirement-savings-shortfall-state-automated-ira/", "name": "Americans Aren’t Saving Enough for Retirement — and All Taxpayers Might End up Paying for It", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2023-09-26T15:41:09.000Z", "mainEntity": { "@id": "https://money.com/retirement-savings-shortfall-state-automated-ira/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/retirement-savings-shortfall-state-automated-ira/#breadcrumb" }, "dateModified": "2024-04-17T13:49:57.000Z", "reviewedBy": [ { "@type": "Person", "name": "Matt Ryan Webber", "url": "https://money.com/author/matt-ryan-webber/", "@id": "https://money.com/author/matt-ryan-webber/#author", "image": "https://img.money.com/2022/09/smda1_crop.jpg?quality=85&w=640&h=640&crop=1" } ] }, { "@type": "NewsArticle", "headline": "Americans Aren’t Saving Enough for Retirement — and All Taxpayers Might End up Paying for It", "articleSection": "Retirement", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2023/05/News-Program-helps-solve-retirement-savings-gap.jpg?crop=0px%2C0px%2C2880px%2C1620px&quality=85", "width": 1012, "height": 569, "caption": "News-Program-helps-solve-retirement-savings-gap" } ], "author": [ { "@type": "Person", "name": "Brenden Rearick", "url": "https://money.com/author/brenden-rearick/", "@id": "https://money.com/author/brenden-rearick/#author", "description": "Brenden Rearick is a former reporter at Money who specialized in covering breaking news and enterprise stories about credit cards, real estate, investing, and personal finance trends.\r\n\r\n", "email": "brenden.rearick@money.com", "alumniOf": "University of Pittsburgh, BA" } ], "publisher": "https://money.com/#organization", "datePublished": "2023-09-26T15:41:09.000Z", "description": "Americans aren't saving enough for retirement, but state automated savings programs offer a solution to help with a $1.3 trillion shortfall.", "abstract": "Americans aren't saving enough for retirement, but state automated savings programs offer a solution to help with a $1.3 trillion shortfall.", "@id": "https://money.com/retirement-savings-shortfall-state-automated-ira/", "inLanguage": "en-US", "dateModified": "2024-04-17T13:49:57.000Z", "editor": [ { "@type": "Person", "name": "Brad Tuttle", "url": "https://money.com/author/brad-tuttle/", "@id": "https://money.com/author/brad-tuttle/#author", "description": "Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals.\r\n\r\n", "image": "https://img.money.com/2014/01/Brad-Tuttle.png?w=226&h=247&crop=1", "alumniOf": "Columbia University School of Journalism, MS", "sameAs": [ "https://twitter.com/bradrtuttle", "https://linkedin.com/in/brad-tuttle-834b225" ] } ], "wordCount": 704, "keywords": [ "News" ], "about": [ { "@type": "Thing", "name": "Retirement", "sameAs": [ "https://en.wikipedia.org/wiki/Retirement" ] }, { "@type": "Thing", "name": "Individual retirement account", "sameAs": [ "https://en.wikipedia.org/wiki/Individual_retirement_account" ] }, { "@type": "Thing", "name": "Tax", "sameAs": [ "https://en.wikipedia.org/wiki/Tax" ] } ] } ] } ```