Get Ready for Automatic IRA Payroll Deductions

NEW YORK (TheStreet) -- America has a savings problem: U.S. adults aren't nearly saving enough for retirement, and about half the country isn't saving for retirement at all.

According to LIMRA, a financial industry marketing and distribution group, 49% of Americans aren't contributing to a retirement plan. Of that number, 56% of young consumers (ages 18-34) are in the "non-savings" group.

"The findings from this survey were disturbing, given that people will increasingly need to rely on their personal savings to make ends meet in retirement," offers Matthew Drinkwater, associate managing director at LIMRA Retirement Research.

Now there are rumblings that state and possibly even federal government is going to force Americans to start socking cash away for their golden years.

President Barack Obama has made the "automatic IRA" a central plank in his 2013 budget. Similar to the 401(k) law passed by Congress in 2006, the automatic IRA would let firms with 10 or more employees enroll new employees automatically in individual retirement accounts.

According to a white paper from AARP, "between 24 million and 43 million workers without current access to a workplace retirement plan or traditional pension would have access to an Auto IRA under the proposal ... That represents from one in five to one in three private-sector workers, a number that could significantly reshape the retirement planning landscape.

Illinois and California have statewide automatic IRA programs in the pipeline.

The Illinois bill targets companies that have been in business for two years. It has an "opt out" clause for employees who do not want to enroll.

California's plan is a bit different. Last September the state introduced a universal retirement savings plan mandating that companies offer "a payroll deposit retirement savings arrangement" via the state's California Secure Choice Retirement Savings Program.

California legislators believe the rule could increase consumer savings rates by $8 billion. Officials say 50% of middle-class workers in the state are on track to retire into poverty.

Consumers in other states can expect similar legislation soon. The federal government is looking to break out automatic IRA programs as well. Federal and state government officials believe way too many Americans are drifting toward a fiscal disaster in retirement.