Access to a workplace retirement plan is an important way to plan for future financial security, yet 48% of U.S. private sector employees between the ages of 18 and 64 work for an employer that offers neither a traditional pension nor a retirement savings plan, according to the results of a recently released AARP study.
“Having access to a workplace pension plan is key to building financial security later in life. And we know people are much more likely to save for retirement if they can do it automatically through their paycheck,” said Debra Whitman, AARP executive vice president and director of public policy. said.
The study found that workers employed in small companies are even less likely than those working in large companies to have a payroll deduction option for a retirement or retirement savings plan. According to the survey results, about 78% of those working in companies with less than 10 employees and about 65% of those working in companies with 10 to 24 employees do not have a plan. Even among employers with more than 1,000 workers, one-third of employees do not have access to an employer-sponsored retirement plan, AARP said.
Education also seems to play a role in the provision of a retirement plan. Seventy-six percent of workers without a high school diploma have no employer-provided pension plan. Fifty percent of workers with a college education and 32% with a bachelor’s degree or higher also fall into this category.
Race, ethnicity and gender are additional factors in access to workplace retirement plans and, therefore, future financial security, AARP said. According to the survey, nearly 64% of Hispanic workers, 53% of Black workers and 45% of Asian American workers do not have access to an employer-provided pension plan.
Gender isn’t much of a factor, according to AARP, although women (49%) are less likely than men (46%) to have access to a workplace pension plan.
Retirement plans are a necessary complement to Social Security, AARP said.
“While Social Security is essential for retirement security, the average benefit is only about $1,600 a month,” Whitman said. “Providing workers with a convenient way to save for retirement helps ensure that they will have additional resources beyond the base provided by Social Security.”