Are US Workers Ready for Retirement? Trends in Plan Sponsorship, Participation, and Preparedness

Abstract

Most workers need a workplace retirement plan to supplement their Social Security to achieve an adequate retirement income — defined here as a 70 percent replacement rate at age 65. However, only 44 percent of workers in the United States participate in a retirement plan at work. The lack of retirement readiness is not caused by the Great Recession but by two structural trends: not enough people have access to a retirement plan at work and, when they do, the amounts saved are often not enough to ensure adequate retirement living standards.

Between 1999 and 2011, the availability, distinct from participation, of employer-sponsored retirement plans in the United States declined from 61 percent to 53 percent. [Ghilarducci, Teresa and Saad-Lessler, Joelle. “Explaining the Decline in Offer Rate of Employer Retirement Plans Between 2001-2012,” Schwartz Center for Economic Policy Analysis and Department of Economics, The New School for Social Research, Working Paper Series, 2014. Forthcoming in the Industrial and Labor Relations Review.] All workers, regardless of sex, race, industry, firm size, and union status, experienced a drop in coverage rates. However, being in a union was somewhat protective; union workers experienced a 6 percent drop in coverage while non-union worker rates dropped 14 percent.

Keywords: Retirement policy, Pension Benefits, Guarantee Retirement Accounts