Expanding Social Security isn’t enough to ensure middle-class retirement security.
Surveys find that barely 1 in 5 Americans are confident of their ability to support a comfortable retirement – and unfortunately for good reason.
In 2014, according to the Federal Reserve, 31 percent of working Americans reported having “no retirement savings or pension whatsoever.”
Many Americans think of savings as a matter of willpower and personal behavior – much like dieting and exercise. It’s one reason why the worsening state of Americans’ retirement security – now approaching crisis proportions – has yet to emerge as an issue that demands extensive government intervention.
In truth, the nation’s retirement savings crisis is as much a problem of public policy as it is about how Americans manage money. Families face massive structural barriers that no amount of personal financial discipline can overcome. Among the reasons retirement is increasingly unaffordable:
1. One in three Americans lacks access to an employer-sponsored retirement savings plan.
Research finds that people are more likely to save for retirement if they’re enrolled in an employer-sponsored retirement plan (and especially if enrollment is by default). Yet in March 2015, just 49 percent of Americans working in private-sector jobs were participating in an employer-provided retirement plan such as a 401(k), according to the Bureau of Labor Statistics (BLS).
One major problem is lack of access. The workers most likely to be offered an employer-sponsored plan work for large firms (those employing 500 people or more). But the majority of Americans work in smaller companies, including more than a third who work in firms with 100 or fewer employees. Because of administrative burdens and other costs, far fewer of these smaller firms offer retirement benefits to their workers.