Marching to Retirement Without a Plan
Only about half of all U.S. workers in the private sector participate in retirement savings plans at their current places of employment, according to a new report by the Center for Retirement Research.
Pension coverage in this country “remains a serious problem,” concludes the Center, which also sponsors this blog.
The goal of the Center’s report is to make sense of the myriad estimates of how many Americans are covered at work. One prominent source of data is the federal government’s survey of employers, the National Compensation Survey. The NCS shows that 78 percent of full-time workers, ages 25 through 64, have some type of defined benefit or defined contribution plan available to them at work.
But that’s the rosiest way to slice the data.
The share of employees who are covered slides to 48 percent when public-sector, often unionized, workers are stripped out of the NCS; when part-time, private-sector workers are added in; and when one counts only the share who actually participate in an employer plan when it’s offered to them.
This is somewhat higher than the 43 percent participation rate the Census Bureau says that private full- and part-time workers themselves report to federal census takers. Other data sources put the comparable share at between 40 percent and 55 percent of private-sector workers in recent decades. (The estimates are for both defined benefit and 401(k)-style plans, but the latter is more common in the private sector.)
These are plan participation rates at a given point in time. Two-thirds of U.S. households, by the time they reach their 60s, have a retirement plan somewhere in their work histories. But many workers have little to show for their efforts, if they moved in and out of jobs that may or may not have offered some type of plan.
The remaining one-third of older households have no pension coverage at all. Too many people are marching toward retirement without much of a plan.