American workers earning less than the national average are not saving for retirement due to a lack of access, rather than not wanting to, new research emphasizes.
Studies from BlackRock and Human Interest underline the significance behind employer-sponsored benefits that include both retirement and emergency savings.
Data from Human Interest found that median income workers without access to an employer-sponsored retirement savings benefits had $624,400 less than a median income worker with access to a Human Interest platform and who allocated over 7% of their income to retirement. Workers without access to a retirement benefit and who saved only 0.9% may have $86,500 by the time they hit retirement, while those who saved an average of 7.4% at Human Interest had $710,900 by age 65.
“When workers are provided access to retirement tools, Human Interest has found the rates at which people are saving are higher than may have been previously thought possible – especially among lower income levels,” the small and medium-sized business (SMB) 401(k) provider wrote in a report.
BlackRock’s Emergency Savings Initiative research further stressed the significance of adding a rainy-day solution to retirement savings plans, noting that a combination of the two can amplify successful results among workers. According to the asset manager’s research, those with emergency savings were 70% more likely to contribute to their defined contribution (DC) retirement plan, and 13 times less likely to take a hardship withdrawal form their 401(k).
“The research on this point is clear: when combined with a retirement solution, emergency savings programs can help people get started and save consistently for retirement,” BlackRock added in the report.
The data comes just months after BlackRock announced its latest investment in the San Francisco-based 401(k) provider, and weeks since Human Interest began offering its new Fast Track 401(k)—a streamlined process that it says takes 10 minutes for SMB employers to establish a retirement plan.
“The importance of access to retirement savings vehicles for employers and employees alike cannot be overstated,” both companies stated in their research. “It is why BlackRock invested in Human Interest earlier this year, and it is why both organizations remain jointly committed to accelerating progress on helping underserved populations save for retirement.”
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