Access to employer-based 401(k) plans is a hot topic, with more states and municipalities implementing government-run 401(k) plans for workers not covered. But where, exactly, do Americans have the most, and least, opportunity to participate?
The Pew Charitable Trusts recently answered the question, finding that the access rate among workers in the metropolitan areas ranges from 71 percent in Grand Rapids, Michigan, to 23 percent in McAllen, Texas.
Nationwide, 58 percent have access to a plan.
Titled “A Look at Access to Employer-Based Retirement Plans in the Nation’s Metropolitan Areas,” the report notes that, “For many Americans, setting aside money in a workplace retirement plan has become a critical component of ensuring financial security in their later years. Still, more than 40 percent of full-time private sector workers say they lack access to either a pension or an employer-based retirement savings plan such as a 401(k).”
It adds that just under half—49 percent—say they participate in one.
“About 51 million full-time, full-year private sector workers live in ‘metropolitan statistical areas’ (MSAs),” according to the report. “That is close to three-fourths of all such workers in the United States. For policymakers at the federal, state, and even city levels, these areas present challenges and opportunities for increasing the availability of workplace retirement plans. For example, industries and workers that tend to have lower access rates are heavily clustered in certain metropolitan areas.”
At the same time, it continues, the concentrated nature of these localities means that government efforts can reach large numbers of people. Recognizing this situation, New York City is considering its own proposal to expand retirement plan coverage for private sector workers within its boroughs.
Other key finding include:
- Metropolitan areas with low access rates are heavily concentrated in certain large states. Nearly three-fourths of the MSAs in the bottom 25 percent are in Florida, Texas, or California.
- Employer and worker characteristics appear to play a large part in the disparate levels of access. For example, metropolitan areas with relatively low rates of access generally have more people working for small employers. Many areas with higher percentages of Hispanic or low-income workers also tend to have lower access rates.