How CalSavers Works: What California Workers and Employers Need to Know

CalSavers is California’s state-run retirement savings program for workers whose employers don’t offer a 401(k) or other qualified plan. Workers are enrolled automatically through payroll deductions into a Roth IRA-based account. They don’t need to take action to get started, and no action is required for them to stay in.

If you’ve spent most of your career at a small business, odds are nobody ever signed you up for a retirement account. Most people in that situation don’t end up saving much. For a long time, access to retirement plans has depended too much on where you work, and the gap it creates is substantial.

California is closing that gap with CalSavers, a state-run retirement savings program designed for workers whose employers don’t sponsor a 401(k) or other qualified retirement plan. The biggest sectors involved are restaurants, retail, and small medical practices, many with less than 10 employees.

On a recent episode of the Boldin Your Money podcast, California State Treasurer Fiona Ma and CalSavers Executive Director David Teykaerts joined Boldin CEO Steve Chen to discuss how the program was built, why automatic payroll saving matters so much, and what they’ve learned from the program.

What Is CalSavers?

CalSavers gives California workers without workplace retirement plans a portable, individually owned Roth IRA that’s funded through automatic payroll deductions, with no paperwork required to get started. The employer simply uploads employee rosters, facilitates payroll deductions, and stays in compliance.

Because contributions are made on a post-tax basis, withdrawals during retirement are tax-free.

Treasurer Ma described the program’s origins simply. California had “seven million workers not covered under a retirement savings plan,” she said. “So we were looking for a way for workers to be able to save that would encourage them to save.” 

For many small employers, setting up a 401(k) can be too expensive or complicated to prioritize. CalSavers is designed to address this without overburdening businesses that are already stretched, by automatically enrolling workers into a savings vehicle that follows them from job to job.

Ma described the experience from the saver’s perspective. “You set it and you forget it,” she said. “You take a certain percentage out of your paycheck every month, and then you don’t see it, so you don’t spend it. And that money grows.” 

Workers who want to explore further can model how CalSavers fits with their broader savings in the Boldin Planner, running projections across accounts and income sources in one place.

CalSavers Compliance for Employers and Workers

For workers, if your employer registers with CalSavers and you don’t opt out, enrollment is automatic. Payroll deductions from your gross pay are invested in a target-date fund matched to your age. You don’t need to make any investment decisions to get started, and the account is yours, following you if you change jobs.

For employers, most California businesses with at least one non-owner employee need to either offer a qualifying retirement plan or register with CalSavers. 

The key facts are:

• No employer fees.
  The costs are covered by the investment fees on participant accounts, which CalSavers has worked to keep low.
• No fiduciary responsibility.
  The program sits outside of ERISA, so employers aren’t on the hook for investment decisions or outcomes.
• No employer matching.
  CalSavers is designed as a pass-through. Employers handle payroll deductions, but they don’t contribute.
• Penalties for noncompliance.
  Employers who don’t offer CalSavers or a qualifying private-sector plan can be fined $250 per eligible employee, with an additional $500 per employee if noncompliance continues for 180 days or more. For a business with just nine employees, that can reach up to $6,750 in a year.

Any qualifying retirement plan (such as a 401(k), 403(b), SEP IRA, or pension) will satisfy the mandate. “We’re trying to say, you just have to do something,” Teykaerts said.

Employers who integrate CalSavers with their existing payroll provider can largely set it and forget it. The main friction is getting employers to take that first step. As Teykaerts put it, “Going from zero to one is the hardest part.” 

How Do CalSavers Contributions and Investments Work?

CalSavers contributions start at 5% of gross pay and are deducted automatically, increasing by 1 percentage point each year up to 8%. In 2026, as a Roth vehicle, the annual contribution limits are $7,500 per year for most individuals, or $8,600 for those who are 50 or older.

“The whole CalSavers product is designed intentionally to be bare bones,” Teykaerts said. Investment menus with too many choices can produce hesitation and inaction. Keeping things simple means more people stay in and more money grows.

Workers who don’t choose an investment are defaulted into a target-date fund based on their age. “Like if you’re younger, it’s 90% stocks, 10% bonds,” Teykaerts explained, “and then slowly the glide path changes as they get older.” CalSavers allows participants to make other investment choices, like a pure money market fund or global equity fund. 

Teykaerts noted that less than 2% of them make any investment choices at all. “That’s who it’s designed for,” he said.

The default Roth structure was chosen because post-tax contributions almost always make more sense than an upfront deduction for low- to middle-income workers. Teykaerts pointed out that less than half of 1% of the program’s participants choose the traditional IRA option.

Why Does Automatic Enrollment Change Saving Habits?

CalSavers is built around a core principle: when saving is the default, people save, but when it requires a decision, most don’t. Teykaerts said data shows workers are “15 times more likely to save” when a plan is available, and “20 times more likely if this is all just done automatically.” 

That’s why the program uses opt-out enrollment instead of voluntary sign-ups. The default is participation. Workers who want to leave the program have to say so. About 35% do opt out, generally because money is tight, but most enrollees stay in because of a tendency to do nothing, which in this case works in their favor. 

“A person can do literally nothing,” Teykaerts remarked, “but if their employer does what they’re supposed to do, then this person will be saving for their future.” 

Consistent saving depends on making the same good choice every pay period, for years. Research on automatic enrollment consistently shows people save more when the decision is made once rather than repeatedly, and the behavioral economics behind it are well established. Boldin sees this borne out in user behavior too. People who establish structured savings plans and step back typically build more over time than those who treat saving as an active decision they need to keep making.

CalSavers Data: What Happens When Saving Is the Default

The program has been running long enough to observe saver behavior at scale, and what it shows is exactly what behavioral economists predicted. “They leave it alone,” Teykaerts said. “If they don’t take it in the first 90 days, then they leave it alone and just go with it.” The inertia that had worked against saving now works to support it.

CalSavers has enrolled roughly 605,000 savers across 255,000 employers, with $1.5 billion saved. The state’s target over the next three to five years is 1.5 million participants.

Perhaps more importantly, CalSavers has helped grow the overall retirement savings market. Teykaerts noted that legacy financial institutions have seen roughly 22% growth since the program’s implementation, because the question for employers went from, “Should we offer a 401(k)?” to, “Which retirement plan should we use?” 

What CalSavers Tells Us About How Automatic Saving Works 

“The principles for successful saving are consistency, wise investing, and then just time,” Teykaerts said. “Allowing time and allowing the compounding effect to kick in.” 

CalSavers demonstrates these principles at scale. Participants who don’t opt out in the first 90 days tend to stay and leave their accounts alone. Over time, their balances grow. When they notice, something shifts, what Teykaerts calls “that kernel of the magic of compounding interest” starting to take hold. For many, he said, CalSavers will “hopefully have catalyzed that savings mindset” even as they move on to other jobs and plans.

That’s what the program is built to do. What it can’t help you figure out is whether 5% is enough, or when to claim Social Security, or how your partner’s income changes the picture. Most CalSavers participants have no other source of retirement guidance, which means those questions often go unasked and unanswered until they’re urgent.

That’s where planning adds clarity. Workers who want to see how their CalSavers balance fits a fuller retirement picture, alongside Social Security, a spouse’s plan, or savings held outside of work, will need to model that somewhere. The Boldin Planner is where they can figure out what comes next.

CalSavers Is One Piece of a Larger System

CalSavers is part of a broader set of savings programs run through the California Treasurer’s office, each aimed at a different moment in a person’s financial life.

CalKIDS provides seed money for student savings accounts: $500 for eligible K–12 students, with additional funds for foster and homeless children. Newborns can receive between $75 and $175. As Fiona Ma put it: “This is free money.” Eligibility is already determined. Parents just have to claim it. The accounts are linked to ScholarShare 529, the state’s long-standing college savings plan. 

CalABLE is a California savings program for people with disabilities that allows eligible individuals to save up to $19,000 annually without affecting SSI eligibility. As of January 1, 2026, the qualifying age of disability onset increased from 26 to 46, substantially expanding eligibility.

Taken together, these programs reflect a simple idea: financial security isn’t built at a single life stage. CalSavers addresses retirement access. CalABLE addresses disability savings. CalKIDS seeds the habit earlier.

Frequently Asked Questions About CalSavers