7 Demographic Disparities Impacting Retirement Readiness

New compendium report examines demographic influences and vulnerable populations in the U.S. workforce

A new survey has uncovered striking demographic disparities regarding workers’ access to an employer-sponsored 401k or similar plan, putting many at a distinct disadvantage in saving for retirement.

Transamerica Center for Retirement Studies, in collaboration with Transamerica Institute, published a Compendium Report on Dec. 19 providing insights into 39 key indicators of retirement readiness, broken by demographics including employment status (full-time, part-time), household income, level of educational attainment, urbanicity, caregiving status, LGBTQ+ status, and race/ethnicity.

“Amid concerns about Social Security, the disappearance of traditional defined benefit pensions, and intensifying expectations that workers self-fund a greater portion of their retirement income, many workers are inadequately saving and are at risk of not achieving a financially secure retirement,” said Catherine Collinson, CEO and president of Transamerica Institute and TCRS. “Enhancing retirement security involves addressing demographic disparities, removing structural barriers, and future-proofing the system so everyone can retire with dignity.”

Here’s a closer look at the seven demographic influences and vulnerable populations identified in the report.

1. Lower-Income Workers

Only 60% of workers with an HHI of less than $50,000 are offered a 401k or similar plan by their employer, and 58% of them participate. In comparison, 74% of workers with an HHI of $50,000 to $99,999 are offered a plan, and 76% participate, while 78% of workers with an HHI of $100,000+ are offered a plan, and 85% participate.

“Lower-income workers have less money and fewer opportunities to save for retirement in the workplace,” said Collinson. Sixty-seven percent of workers with a household income (HHI) of less than $50,000 feel they do not have enough income to save for retirement.

Retirement savings increase dramatically with household income. Workers with an HHI of less than $50,000 have saved just $3,000 in total household retirement accounts while workers with an HHI of $50,000 to $99,000 have saved $42,000, and those with an HHI of $100,000+ have saved $172,000 (estimated medians).

Forty-eight percent of workers with an HHI of less than $50,000 expect to retire at age 70 or older or do not plan to retire. Thirty-five percent expect Social Security to be their primary source of retirement income.

The Saver’s Credit is a tax credit to incentivize savings among low- to moderate-income workers who save for retirement in a 401k or similar plan or IRA. Unfortunately, fewer than half of workers who may meet the income eligibility requirements are aware of it.

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