401(k) plans are becoming the most important tool for workers to secure their retirement security.
The Problem:
Access: Among the 153 million working Americans in 2004, only 49 percent (under 75 million) worked for a company that offered a 401(k) plan.
Lack of Participation: Out of all workers eligible to participate in a 401(k), only 79 percent chose to do so in 2004.
Starting to Save too Late: While the typical person joins the workforce around age 22, most do not begin to participate in a company sponsored retirement plan (like a 401(k)) until age 41.
Solution: Make a Great Idea Even Greater by Adding Automatic 401(k) Features
The core concept behind the automatic 401(k) is simple: utilize the power of inertia to promote rather than hinder saving. A 401(k) with automatic features increases participation, contribution rates, and asset accumulation.
Pew is no longer active in this line of work, but for more information visit the Retirement Security Project on PewHealth.org.