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Many Americans are not saving enough for retirement. Only half of current private sector workers participate in an employer-sponsored retirement plan. For the private sector workers who do participate, savings remain subpar. In 2013, even among households with some retirement savings, the median household nearing retirement had only $111,000 in 401k/IRA accounts. This equates to a monthly annuity of just $500 per month, far less than what the household is likely to need in retirement. 

A hypothetical middle-income worker who regularly contributes to a 401k/IRA account (i.e., 6 percent salary contributions, 50 percent employer match, 50-50 stock bond allocation) should expect to accumulate $314,000 at retirement (fees already subtracted). In reality, however, such an individual only holds around $100,000. The sharp gap comes from intermittent or stopped contributions or cash-outs known as leakage.

Automatically enrolling workers into a 401k with automatically escalating amounts can help promote better saving habits among workers. Otherwise, 401k balances may remain insufficient to support a stable retirement.