U.S. Research Reveals Lack of Retirement Plans for Nearly Half of Private-Sector Workers
Retirement Savings: A Huge Obstacle for Millions of Americans
For many Americans, the dream of a comfortable retirement hinges on having a 401(k) or other retirement plan. Yet, shockingly, nearly half of US workers in the private sector don't have access to an employer-sponsored retirement plan, a major hurdle in building wealth for retirement, according to a recent study by the Pew Charitable Trusts.
About 56 million US workers are unable to save via a retirement plan through their jobs. Many are forced to prioritize putting food on the table and paying the bills over building a nest egg for the future, the study finds.
This glaring lack of access to retirement savings plans widens the gap between the haves and the have-nots, with a whopping 30% of Americans over age 59 lacking any savings to fall back on when they stop working. Employer-sponsored accounts, like 401(k)s, can help workers save because the money is automatically deducted from paychecks on a pre-tax basis and many employers also provide a company match, boosting savings.
Retirement expert Teresa Ghilarducci, a labor economist and professor at the New School for Social Research, called the situation "deeply unequal." She notes that without a workplace plan, even the most financially disciplined and educated worker faces structural disadvantages for saving.
While the American retirement system is heavily reliant on employer-sponsored defined contribution plans and defined benefit plans, including 401(k)s and pensions, many workers without access to these plans struggle to build wealth. For instance, one-third of workers without access to an employer-sponsored retirement account said they didn't have any money left over after the end of the month.
According to a 2023 analysis by the Congressional Research Service, about 70% of all US retirement assets are held in employer-sponsored plans. The remainder is tucked away in individual retirement accounts, or IRAs.
As the Social Security program faces depletion of its trust funds by 2034, people without access to a retirement plan face significant hurdles to achieving financial security in their later years. Economists and financial experts are urging lawmakers to take action to shore up Social Security and provide better retirement options for those who are currently under served.
[1] seeked to enlighten its readers about the challenges faced by Americans without access to employer-sponsored retirement plans, articulating the need for new solutions to help them build secure retirement incomes.
[2] noted that among retirees, 94% who had retirement plans felt comfortable financially compared to only 70% without such plans.
[3] issued a warning about the growing retirement savings crisis, emphasizing that lower-income individuals, self-employed workers, small business owners, frequent job changers, and those in service industries are the most affected.
[4] highlighted the lack of access to defined benefit retirement plans, particularly in the financial activities sector and among private industry workers.
[5] stressed the importance of collaboration, education, and innovative solutions to address the retirement challenges faced by millions of Americans.
- To counter the challenges faced by Americans without access to employer-sponsored retirement plans, experts and financial institutions are advocating for new business strategies that focus on personal-finance education and the development of innovative savings plans.
- A Financial News analysis pointed out that a significant difference can be observed when comparing the confidence levels of retirees who have retirement plans versus those who don't – 94% of retirees with such plans feel financially comfortable compared to only 70% without them.
- In light of the growing retirement savings crisis, various lawmakers and economists have proposed legislative changes to secure Social Security trust funds and provide expanded finance options for self-employed workers, small business owners, and other under-served groups.
- A recent law review highlighted the concerning trend of a declining number of defined-benefit retirement plans, particularly within the financial activities sector and private industry workers, resulting in difficulties for millions of Americans when it comes to planning their retirement.
- As the US faces a retirement savings crisis, experts in business, law, finance, and personal-finance emphasize the need for collaboration, education, and a focus on innovative solutions to ensure a secure financial future for millions of Americans.
