Automatic Enrollment in Retirement Savings Vehicles

Evidence from the Health and Retirement Study

by Jeremy Burke, Angela A. Hung, Jill E. Luoto

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While there has been considerable research investigating the impact of automatic enrollment on participation and savings outcomes, less research has focused on characterizing individuals who actively choose to opt out of a DC plan in which they were automatically enrolled. In this study, we use data from the 2008 and 2010 waves of the HRS to examine how employers' automatic enrollment policies influence longer-run participation and contribution status among older Americans, with a focus on examining demographic, financial, and health differences between those who choose not to participate under automatic enrollment, those who choose not to participate under voluntary enrollment policies, and those who are actively participating. We find large socioeconomic and health differences between individuals who are participating in their employer's DC plan and those who are not. Plan participants are significantly more likely to be white, married, college educated, enjoy higher incomes, be longer tenured at their current employers, in good health, and have higher wealth both within and outside of retirement accounts than individuals not participating in their plan. While there are large differences between individuals who are participating in their employer-sponsored DC plan and those who are not, we find relatively little differences in characteristics across enrollment regimes when we condition on participation decisions. In particular, those who have chosen to opt out of participating in a plan in which they were automatically enrolled appear fairly similar to those who have elected not to participate under voluntary enrollment and both groups appear to be largely financially unprepared for retirement. Similar to previous analyses, we find that automatic enrollment is associated with a large increase in plan participation and is particularly effective at getting lower income, less educated, and minority individuals to participate. However, automatic enrollment is not positively associated with longer-run contribution status in our sample—those who opt-in are more likely to continue making contributions over time.

Table of Contents

  • Chapter One


  • Chapter Two

    Previous Work on Automatic Enrollment

  • Chapter Three

    Health and Retirement Study Data

  • Chapter Four


  • Chapter Five


This paper series made possible by the RAND Center for the Study of Aging and the RAND Population Research Center.

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