The wealth divide between white families and families of color continued to widen in the years following the COVID-19 pandemic, driven in large part by disparities in retirement savings — and policy advocates are pointing to state-sponsored automatic enrollment programs as one of the most practical tools available to close the gap.
Why It Matters
Retirement savings represents the single largest driver of household wealth in the United States. Unequal access to employer-sponsored retirement plans has become one of the most significant structural barriers separating white workers from their Black, Hispanic, and other minority counterparts when it comes to long-term financial stability.
More than 50 million Americans currently have no retirement plan available through their employer — a gap that falls disproportionately on workers of color. The consequences are measurable: the typical white family held $240,000 more in median wealth than the typical Black family in 2022, and $223,000 more than the typical Hispanic family. Both gaps expanded by roughly $50,000 between 2019 and 2022.
What Happened
The Pew Charitable Trusts, which has studied retirement savings policy and surveyed Black, Hispanic, Asian American/Pacific Islander, and Native American and Indigenous workers about their views on wealth-building, is advocating for broader adoption of state and municipal automatic IRA programs as a targeted response to the crisis.
Currently, 15 states have launched active auto-IRA programs. These programs require most employers that do not already offer retirement benefits to establish payroll deduction accounts for their workers. Employees are automatically enrolled but retain the right to opt out. Contributions go into Roth IRAs funded with post-tax earnings, meaning workers can later withdraw their contributions without tax penalties.
Notably, the programs do not require employers to match employee contributions — a design feature intended to lower the barrier to business participation.
Minnesota’s program covers workers at businesses with five or more employees. Hawaii’s auto-IRA is scheduled to launch this year, and Washington state’s program is set to begin in 2027.
By the Numbers
- $240,000 — median wealth advantage of white families over Black families in 2022
- $223,000 — median wealth advantage of white families over Hispanic families in 2022
- 50 million+ — Americans without access to an employer-sponsored retirement plan
- 15 — states with active automatic IRA programs, collectively covering approximately 1.2 million workers
- $3 billion — total savings accumulated through state-sponsored auto-IRA plans to date
- 35–37% — the share of auto-IRA participants who opted out in California and Illinois, respectively
Zoom Out
The expansion of state-run retirement programs reflects a broader policy movement gaining traction across the country as Congress has not enacted a federal mandate requiring employers to offer retirement benefits. Pew argues that state-level automatic enrollment programs are effectively reaching the workers most likely to have been excluded from employer-based savings — those in lower-wage industries, service sectors, and small businesses.
John Scott, director of Pew’s retirement savings project, said the programs appear to be fulfilling their core mission. “I think these programs are doing what they’re supposed to do, which is really reaching those workers who have their access to retirement benefits cut off just by virtue of where they work,” Scott said.
Scott also acknowledged that long-term savings programs face real-world friction when workers are managing short-term financial stress, arguing that building short-term financial resilience is a prerequisite to encouraging lasting retirement behavior. As federal policymakers weigh significant shifts in domestic spending — including the Trump administration’s proposed fiscal year 2027 budget, which calls for deep reductions to several domestic programs — the question of who bears responsibility for retirement access is likely to remain unsettled at the national level.
What’s Next
Hawaii’s program launch and Washington state’s planned rollout will add to the growing pool of workers covered by automatic enrollment. Pew continues to push for additional states and municipalities to adopt similar frameworks, particularly targeting states with large populations of workers in industries that traditionally lack employer retirement offerings.
Whether opt-out rates in newer programs mirror the roughly one-in-three rates seen in California and Illinois will be an important early indicator of how effectively these programs translate into lasting savings behavior among the workers they are designed to serve.