(Bloomberg Businessweek) -- Only 45 percent of U.S. workers participate in an employer-sponsored retirement plan, according to the Pew Charitable Trusts.
Many don’t even have the option—one-third of U.S. workers aren’t offered a pension or 401(k)-style plan by their employers.
The Vulnerable
Groups with the highest percentages of workers without access to a plan:Part-Timers: 56 percent, vs. 31 percent of full-timers without accessHispanics: 55 percent, vs. 32 percent for whites and 36 percent for blacksMillennials: 45 percent, vs. 30 percent of baby boomers and 35 percent of Gen XersHigher earners are much more likely to have savings in a workplace plan or individual retirement account, according to a recent study conducted by New School professor and labor economist Teresa Ghilarducci.
The State Fix
Five states are planning to automatically sign up workers for state-run individual retirement accounts.① California② Connecticut③ Illinois④ Maryland⑤ OregonThe Oregon IRA● OregonSaves starts on Oct. 15, initially targeting workers at 2,100 of the state’s largest employers● Workers will save 5 percent of their incomes unless they opt out or adjust the percentage● About 200,000 self-employed workers will have the option to enroll by the end of 2018● 77 percent of workers who participated in a pilot program are opting to remain enrolled“Voluntary retirement accounts fail in three ways: lack of coverage, poor investments and high fees, and no guaranteed payments for life. State plans fix the first problem.” —Teresa Ghilarducci
States Won’t Do It All
While state laws can encourage more participation, they’re not likely to provide as big a nest egg, because they don’t offer the benefit of an employer contribution.
To contact the author of this story: Ben Steverman in New York at bsteverman@bloomberg.net.
To contact the editor responsible for this story: Dimitra Kessenides at dkessenides1@bloomberg.net.
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