Participation and Pre-Retirement Withdrawals in Oregon’s Auto-IRA

About half of private sector workers in the United States do not participate in an employer-sponsored retirement plan at their current job. To fill the gap, a number of state governments around the country have recently launched initiatives to automatically enroll their uncovered workers in individual retirement accounts (IRAs). This article reports on the experience of Oregon, which was the first state to launch an auto-IRA program (OregonSaves). Because the program only began in July of 2017 and is in its infancy, analysts are still debating basic statistics about its operation, such as the participation rate. To advance the conversation, this study uses administrative data from OregonSaves to develop a conceptual framework for measuring participation. It then shifts the focus to pre-retirement withdrawals, tracking a cohort of employees who had funded accounts in September 2018 over a 12-month period. The study finds that participation ranges from 48% to 67% (the exact rate is uncertain because of data limitations) and that 20% of employees made at least one pre-retirement withdrawal during the subsequent year, removing $1,000 on average. TOPICS: Wealth management, retirement Key Findings • Most eligible employees participate in Oregon’s auto-IRA. • Some employees will use their account for precautionary savings as well as retirement. • It is still too early to draw conclusions about the program’s overall effect on household finances.