Access to a workplace retirement plan is an important means of planning for financial security later on, and yet 48% of U.S. private-sector employees aged 18 to 64 work for an employer that does not offer either a traditional pension or a retirement savings plan, according to the results of a newly released AARP study.
“Having access to a retirement plan at work is critical for building financial security later in life. And we know people are much more likely to save for retirement if they can do so automatically through their paycheck,” AARP Executive Vice President and Chief Public Policy Officer Debra Whitman said.
The study found that workers employed at small businesses are even less likely than those working at larger businesses to have a payroll deduction option for a pension or retirement savings plan. Approximately 78% of those who work in firms with fewer than 10 employees, and about 65% who work in companies with 10 to 24 employees, lack a plan, according to survey results. Even among employers with more than 1,000 workers, one-third of employees do not have access to an employer-sponsored retirement plan, the AARP said.
Education also appears to play a role in whether a retirement plan is offered. Seventy-six percent of workers with less than a high school degree do not have an employer-provided retirement plan. Fifty percent of workers with some college, and 32% with a bachelor’s degree or higher, fall also into this category.
Race, ethnicity and gender are additional factors in access to workplace retirement plans and, therefore, future financial security, the AARP said. According to the survey, almost 64% of Hispanic workers, 53% of Black workers, and 45% of Asian American workers lack access to an employer-provided retirement plan.
Gender isn’t very much of a factor, the AARP said, although women (49%) are less likely than men (46%) to have access to a workplace retirement plan.
Retirement plans are a necessary supplement to Social Security, the AARP said.
“While Social Security is essential to retirement security, the average benefit is only about $1,600 a month,” Whitman said. “Providing workers with a convenient way to save for retirement helps ensure they will have additional resources beyond the foundation provided by Social Security.”
