Suggested by James Grunewald 6 months ago

The Unmet Need

A Retirement Crisis Hiding in Plain Sight

Half of American workers—56 million people—have no access to a workplace retirement plan. For those who do get access through new state auto-IRA programs, the results are troubling:

• 50%+ opt-out rates among low-income workers in existing programs
• 33% of all contributions withdrawn before retirement (OregonSaves data through 2023)
• Median account balance of just $600 after years of program operation
• Many states struggling to achieve even 50% employer compliance with enrollment mandates

The federal government recognized this crisis and passed the Saver's Match as part of SECURE 2.0—a program that will deposit up to $1,000 per year directly into retirement accounts for low-and-moderate income workers, matching 50 cents for every dollar they save.

The problem: The infrastructure to deliver this benefit doesn't exist.

Why Current Systems Will Fail

1. The Roth Problem: Every state auto-IRA program uses Roth accounts by default. The Saver's Match cannot be deposited into Roth accounts—it must go to a traditional IRA. Millions of savers will need new accounts opened and linked.
2. The Filing Problem: Many eligible workers don't file federal tax returns because they have no tax liability. Without filing, they can't claim the match—even if they've been saving diligently.
3. The Awareness Problem: The current Saver's Credit reaches only 5.7% of eligible taxpayers. Without intervention, the Saver's Match will suffer the same fate.
4. The Data Problem: State programs don't know why people opt out or withdraw. They can't intervene because they can't predict who needs help or when.
5. The Coordination Problem: Treasury needs to send ACH payments to millions of individual retirement accounts across hundreds of financial institutions. The routing infrastructure doesn't exist.

The Clock Is Ticking

The Window of Opportunity

• Treasury is actively seeking solutions. They issued a 29-question Request for Information because they don't have answers yet. Guidance and regulations are still being developed.
• States are scrambling. Connecticut just passed legislation specifically to create traditional IRA vehicles for Saver's Match recipients. Other states are behind.
• 20 states have enacted auto-IRA programs, with 16 now fully operational. This is a growing market with demonstrated budget authority and urgent need.
• $9.3 billion in federal spending is projected for the Saver's Match from 2027-2032. That money will flow somewhere—the question is whether it reaches the people it's meant to help.

First-Mover Advantage

The organizations that build trusted relationships with state programs and Treasury now will be positioned to capture this market. Once the program launches and systems are in place, switching costs become significant.