It took nearly 50 years, but half of private-sector workers are saving in 401(k)s for the first time.
Long after workplaces started using these retirement plans in place of traditional pensions, they are finally reaching a tipping point. Around 70% of private-sector employees in the U.S. now have access to a 401(k)-style retirement plan. A decade earlier, 60% had access and 43% contributed, according to the U.S. Labor Department.
Policymakers have moved in recent years to broaden access. More states are requiring companies to offer a retirement savings option. Congress has given small businesses more generous incentives to launch them. And companies are automatically enrolling more workers, substantially raising participation rates.
Growth in worker adoption is likely to accelerate due to a federal law that went into effect this year, requiring many new 401(k) plans to use automatic enrollment.
Even though adoption has picked up recently, about 40% of the working population isn’t saving enough to maintain their lifestyle throughout retirement, according to Boston College’s Center for Retirement Research.
The plans allow workers to add money straight from their paychecks without subtracting income taxes upfront.
Small businesses, which employ nearly half of American workers, haven’t often provided retirement-savings plans. But more are adding them in response to a competitive job market, new tax credits and laws in several states that require many employers to give workers a way to save.
Disclaimer
The information contained in South Florida Reporter is for general information purposes only.
The South Florida Reporter assumes no responsibility for errors or omissions in the contents of the Service.
In no event shall the South Florida Reporter be liable for any special, direct, indirect, consequential, or incidental damages or any damages whatsoever, whether in an action of contract, negligence or other tort, arising out of or in connection with the use of the Service or the contents of the Service. The Company reserves the right to make additions, deletions, or modifications to the contents of the Service at any time without prior notice.
The Company does not warrant that the Service is free of viruses or other harmful components
