4 in 10 Working Americans Lack Retirement Plan Access, Census Bureau Data Shows
According to the latest data from the U.S. Census Bureau’s Survey on Income and Program Participation (SIPP), 42% of full-time working Americans ages 18-65 do not have access to a workplace retirement plan.
Washington, D.C.-based think tank the Economic Innovation Group (EIG) recently updated its analysis of who’s left out of America’s retirement savings system, drawing on the most current federal data that it says underscores the urgent need for retirement reform.
Earlier this month, EIG published a brief titled, “The U.S. Retirement System: Fast Facts,” written by EIG Research Assistant Sarah Eckhardt and EIG Economist Benjamin Glasner. In it, EIG also pointed to new SIPP data showing that 44.1% of full-time working Americans do not participate in a retirement plan, and 50.5% do not benefit from an employer match. This translates to 40.6 million full-time American workers without access to a retirement plan and 48.8 million without an employer match.
While the brief begins by acknowledging that the tax-advantaged retirement savings system in the United States is “one of the most effective wealth-building programs in the world,” it quickly adds that too many working Americans are left behind. “Their access to employer-provided retirement plans is limited, and the incentives in the retirement system fail to encourage lower-income workers to save,” the brief says.
The SIPP data—which EIG says is the most reliable source for measuring retirement plan access because it captures both access and matching, and oversamples low-income individuals—shows coverage is significantly more limited for part-time workers, who typically lack access to similar benefits as their full-time peers. SIPP finds 79.0% of part-time employees aged 18 to 65 lack access to any retirement plan, 80.4% do not participate in a plan, and 83.2% do not receive an employer match on their retirement savings.
Low earners most impacted
Not surprisingly, the data show that lower-earning workers lack access to retirement plans at a much higher rate than higher-earning workers and also benefit far less from employer matches.
SIPP finds 78.7% of full-time workers in the lowest-earning decile (earning less than $27,400 a year) lack access to a retirement plan, compared to just 18.2% in the highest-earning decile (earning more than $180,600 a year). Zooming out to the top half of American workers by income, only a quarter of them lack access to a plan, compared to 65.2% of the bottom half.
When it comes to matches, 82% of the lowest-earning workers don’t receive employer matches, while only about 20% of the highest earners lack a match.
Among low-income workers who do participate in a plan, the brief says a majority rely on employer matching to be part of the system, suggesting that expanding access alone isn’t enough; matching incentives are particularly effective for low-income workers.
Disparities extend to demographics as well. While more than 50% percent of Asian and non-Hispanic White workers report receiving matched employer contributions to their retirement accounts, just 39% of Black workers and only 33% percent of Hispanic workers report receiving matched employer contributions.
EIG says RSAA would help
The EIG brief closes by saying that with tens of millions of workers—especially low-income workers—lacking access to a workplace retirement account, the U.S. retirement system is in desperate need of reform. It goes on to say the Retirement Savings for Americans Act (RSAA) is designed to address the problem of how to close the private retirement savings gap for those left out of the current system.
“The large and persistent gap in access to retirement benefits is a policy failure. The new data underscores the need for solutions like the bipartisan Retirement Savings for Americans Act, which would empower full-time and gig workers being left behind by the current system,” EIG CEO John Lettieri told 401(k) Specialist.
EIG has been a strong proponent of the RSAA, first introduced in late 2022 and reintroduced on Capitol Hill earlier this year. The bill follows recommendations outlined in an EIG research paper by economists Kevin Hassett and Teresa Ghilarducci to enact a retirement savings program aimed at low-income workers by building on models like the federal Thrift Savings Plan.
Notably, the bill is vigorously opposed by the American Retirement Association, which said in a 2024 statement for the record to the Senate HELP committee that it would decimate the employer sponsored retirement system. From that statement:
“While the proposal is a well-intentioned attempt to address the retirement plan coverage gap, it is impractical, unfair, prohibitively expensive, and ripe for political abuse. The most concerning feature of this proposal is the inclusion of the taxpayer-funded Government Match provision, which is only accessible to individuals who do not currently have access to an employer-sponsored retirement plan. The inclusion of a Government Match creates a perverse incentive for employers, particularly small employers with razor-thin margins, to shutter their existing retirement plans so that their workers are eligible to be enrolled in the Fund. This would harm certain retirement savers because many of these plans that would be eliminated have more generous employer matching rates than the Government Match.”
SEE ALSO:
• ‘Retirement Savings for Americans Act’ Introduced Again in Congress
• Private Sector Workers See Boost in Retirement Plan Accessibility
• Bold Reforms Needed to Close ‘Guarantee Gap’ Jeopardizing Retirement Security
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
