WI23-12: Financial Inclusion Across the United States

We study retirement and bank account participation for the universe of U.S. households with a member aged 50 to 59 in the administrative tax data. In the lowest income quintile in 2019, 21 and 70 percent of households had retirement and bank accounts, respectively. For the same group, 38 percent of households had access to an employer retirement plan. Geographic variation in financial participation primarily relates to income rather than racial composition. By instrumental variables, we estimate the causal effect of access to an employer retirement plan. Universal access with automatic enrollment could increase retirement account participation by 17 percentage points in the lowest income quintile over ten years.