Survey Highlights Worker Perspectives on Barriers to Retirement Saving

Insights from those at small to midsize businesses could inform efforts to encourage more saving

Survey Highlights Worker Perspectives on Barriers to Retirement Saving
Retirement savings
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Many Americans are not saving enough for retirement, and potential overreliance on federal programs—such as Social Security and Medicare—to ease income insecurity among aging populations is likely to strain government budgets. Half of retired Americans receive $1,366 or less in monthly Social Security retirement benefits, which means that real retirement security typically requires additional sources of income, most commonly employer-sponsored retirement plans and personal savings.

But workers face numerous barriers to participating in employer-sponsored plans. Many do not have access to these plans at all. Others lack familiarity with their savings options or struggle to find enough money to contribute as they balance competing financial priorities, such as paying down consumer debt, financing their children’s education, or saving for a down payment on a house. Still others thwart the growth of their retirement savings by taking early withdrawals. Against this backdrop, policymakers in states across the country are considering how best to boost worker access to employer-sponsored plans. Among the options are individual retirement accounts (IRAs) that automatically enroll workers, from which workers can opt out.

To help provide guidance on what encourages or prevents people from saving for retirement, The Pew Charitable Trusts conducted a nationally representative survey of private sector workers at small to midsize businesses with five to 500 employees. These businesses often find cost and resources to be barriers to offering retirement benefits to their employees.

Among the key findings of the survey:

  • Overall, two-thirds of those working for small to midsize employers said they have access to a plan at their jobs, and 68 percent of that group participates.
  • Whether workers have access to employer-sponsored retirement plans differs by type of work and worker characteristics.
    • Part-time workers, those with lower wages, and those who had experienced unemployment for an extended period are less likely than other employees to have access to a workplace plan.
    • Hispanic full-time workers have less access to plans than white full-time workers.
    • Full-time workers at businesses with fewer than 100 employees are less likely than those at businesses with more than 250 employees to have access to an employer-sponsored plan.
    • Workers in wholesale and retail trade businesses are less likely to have a workplace plan than those in other industries.
  • Employers can help workers build retirement savings: When businesses contribute to retirement plans, fulltime employees are more than twice as likely as those whose employers do not contribute to participate.
  • Only 28 percent of full-time workers without access to employer-sponsored plans report having any other retirement savings through alternative approaches, such as an IRA or a 401(k) from a previous employer.
    • White workers are more likely than Hispanic workers to have retirement savings; older workers are more likely than younger workers; and workers with at least a bachelor’s degree are more likely than workers without that level of education to have some sort of savings.
    • Men and women are equally likely to have access to, and participate in, an employer-sponsored retirement plan, but among those without a plan at their jobs, men are less likely than women to have any savings.
  • Though many workers today must manage their own retirement savings, less than a third had tried to figure out in the past two years how much income they would need in retirement.
    • Those with access to an employer-sponsored plan are 32 percent more likely than those without such access to use an online tool or calculator to assess their retirement needs; those without access to an employer-sponsored plan are 33 percent more likely than those who do have access to “guesstimate” those needs.
    • Among those least likely to plan are those with less education, those who have never married or are living with a partner, those who have children, those who have been unemployed for at least four weeks in the past two years, and those ages 18 to 34.
  • Survey respondents showed only limited familiarity with retirement plan options. Respondents were most often familiar with 401(k) plans but generally unfamiliar with annuities or myRA.
  • About a third of those who had ever had a retirement plan said at some point they had taken a loan or withdrawn money—what is known as a distribution—typically to pay everyday bills.
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