U.S. Workers Rarely Save For Retirement Without Automatic Retirement Plan Contributions
401(k) Plans Financial Planning
Key Takeaways
- When workers do not have access to a workplace retirement plan, they often do not take step to establish a consistent saving system on their own.
- If workers have access to a retirement plan through work, their participation in saving for retirement increases by more than 1340%.
“Only 5% of workers take the steps to open up a retirement savings account if it is not provided by their employer. If a worker has access to an employer-sponsored plan, participation jumps to 72%," says Angela Antonelli, the executive director of the Georgetown University Center for Retirement Initiatives, in Kerry Hannon's Yahoo Finance article this last week.
When employers are forced to implement employer-sponsored retirement plans (ESRP), they generally forgo the state's bare-minimum program and set up their own. Moreover the implementation of these programs across 19 states thus far, have increased, "the probability that an individual works for a firm with an ESRP by roughly 3 percent, and the probability that the individual participates in that ESRP by around 7 percent."
So it should come as no surprise that when The Pew Charitable Trusts surveyed business owners, "more than half of employers not offering plans stated that they would implement one in response to auto IRA legislation."
The National Bureau of Economic Research even identified that if discerning business owners, "are more highly compensated, forward-looking, and wealth-maximizing than the average worker, then the increased salience of retirement benefits weigh in favor of ESRPs over state IRAs."
In the end, the State IRA programs are only meant to be the "training wheels" on the way to a better equipped financial understanding and productive/ more lucrative means of saving for retirement.
To read the Yahoo Finance Article: https://finance.yahoo.com/news...
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