Americans are at times lampooned for their independent attitude, thus, one might expect the average Joe Sixpack to balk at a plan to automatically take money from his paycheck for a retirement account.
As it turns out, most U.S. workers are open to automatic enrollment in and contributions to an “auto-IRA,” a state-sponsored or non-employer-oriented individual retirement account, according to a recent survey by the Pew Charitable Trusts.
In a survey of more than 2,900 U.S. workers, 73 percent supported both automatic enrollment and automatic escalation of contributions in an IRA not associated with their place of employment. Approximately two-thirds of the respondents supported the establishment and contribution to state-sponsored accounts.
Automatic enrollment, which automatically opens an account and begins contributions, and automatic escalation, which gradually increases the rate of contributions over time, have both become common options in workplace retirement plans after behavioral research found both to be effective in boosting plan participant savings rates and retirement readiness, but to date have not been formally applied to IRAs.
Survey participants seemed most comfortable with a 6 percent starting contribution rate. While a quarter of the respondents said they were unsure if they would take part, only 13 percent of the respondents said that they would opt-out of an auto-IRA.
Though previous research has shown that access to employer-sponsored retirement plans varies widely by age, race and employment status, Pew found similar support for the concept of auto-IRAs across all demographic groups.