President Trump recently signed an executive order directing the creation of a federal website aimed at encouraging workers without employer-sponsored retirement plans to open Individual Retirement Accounts (IRAs). But decades of experience with voluntary IRA enrollment suggest that most households either don't know about the option or fail to act due to inertia.
To truly expand retirement savings coverage, Trump should now throw his weight behind federal legislation modeled on automatic IRAs—a concept already proving successful in 17 states. These state-level programs automatically enroll workers in retirement savings plans, with the option to opt out, and are closing the coverage gap for millions of Americans.
Between one-third and one-half of the U.S. private-sector workforce lacks access to an employer-sponsored retirement plan. Lower-income and high-turnover workforces are less likely to demand such benefits, while small business owners often face high administrative costs and regulatory burdens that discourage plan sponsorship.
In theory, workers without employer plans can open their own IRA at virtually any financial institution. In practice, however, awareness is low and inertia is high—so only a small fraction ever do. As rising gas prices squeeze household budgets, the need for accessible retirement savings tools becomes even more urgent.
The Treasury Department first approved automatic enrollment in retirement plans in 1998, allowing 401(k) sponsors to automatically enroll employees at a preset contribution rate and invest in a diversified fund—such as a balanced or target-date fund. Employees retain the right to opt out entirely or adjust their contribution and investment choices.
Yet despite this regulatory green light, adoption has been uneven. Many small businesses remain reluctant to take on the responsibilities of plan sponsorship. Automatic IRAs, by contrast, shift much of the administrative burden to state-run clearinghouses, making it easier for employers to participate without the fear of added liability or costs.
Supporters argue that a federal automatic IRA law would build on the momentum of state initiatives and create a uniform standard. Opponents, however, raise concerns about federal overreach and potential costs to small businesses. The debate comes amid broader political tensions, as seen in the legal fight between the AFL-CIO and the Trump administration over union financial disclosure rules.
With millions of workers still left out of the retirement system, the question is whether Washington will follow the states' lead—or let inertia continue to define the nation's retirement policy.
