A new government program that takes money out of people’s paycheck is gaining interest in state legislatures across the country — in part because it is wildly popular with voters.

Oregon, Illinois and California have launched initiatives to create retirement savings accounts for residents whose employers do not offer company-sponsored programs. In those states, tens of thousands of workers have saved more than $40 million for their own retirements.

The programs automatically divert 5 percent of an employee’s paycheck into a retirement account with a few basic investing options. Employees have the option to set a different savings level, or to opt out entirely, without penalties.

The new programs are meant to address a growing percentage of Americans who are not prepared for retirement. About a third of households headed by those over the age of 55 have no savings, according to Federal Reserve data.

Another Fed study found 61 percent of Americans would be able to cover a $400 emergency expense with cash, but the other 39 percent would be forced to borrow money from relatives or carry a balance on a credit card to meet that expense.

“About half the people who are working in the country and in Oregon too don’t have any way to save for retirement. They’re totally on their own,” said Tobias Read (D), the Oregon state Treasurer who runs his state’s program, OregonSaves. “How do we put the power of compound interest to work for people?”

To spur more savings, the new programs rely on behavioral science research pioneered by Richard Thaler, the Nobel prize-winning University of Chicago economist, and Cass Sunstein, a University of Chicago legal scholar, whose work led to an approach to public policy known as the nudge theory.

Read more @The Hill