Only half of all U.S. workers have the opportunity to save for retirement through a plan sponsored by their current employer and only 40% of all U.S. workers are participants in employer-sponsored retirement plans.

Key Terms

Sponsorship Rate: % of all workers who work for an employer who sponsors a retirement plan, regardless of whether the worker is eligible for the plan

Participation Rate: % of all workers are participants in a plan, regardless of whether the worker works for an employer who sponsors a plan

Key Points

Only half of all U.S. workers have the opportunity to save for retirement through a plan sponsored by their current employer.

In 2011, there were 153.7 million workers in the United States. Only 75.2 million of them – roughly 50% – worked for an employer who sponsored a retirement plan.

Only 40% of all U.S. workers are participants in employer-sponsored retirement plans.

In 2011, only 61.0 million workers – roughly 40% – participated in an employer-sponsored plan.

As workers age, they are more likely to work for an employer who sponsors a retirement plan – until they reach age 65.

There is a large gap in sponsorship rates between workers under age 25 and those age 25-64. In 2011, approximately 55% of workers age 45-64 and 48% of workers age 25-34 worked for an employer who sponsored a plan compared with 34% of workers age 21-24. This may be partially due to the fact that workers age 21-24 are overrepresented in service jobs,¹ which provide the least access to employer-sponsored retirement plans.²

The sponsorship rate drops significantly once workers reach age 65, falling from 56% for workers age 55-65 to 41% for workers age 65+. One possible explanation for this design may be that workers age 65+ are already collecting Social Security benefits and/or benefits from previously established retirement plans. Therefore, they may be more willing to work for employers who do not sponsor retirement plans.

As workers age, they are more likely to be participants in employer-sponsored retirement plans – until they reach age 65.

In 2011, roughly 50% of workers age 45-64 were participants in an employer-sponsored retirement plan compared with 36% of workers age 25-34 and 16% of workers age 21-24. Some of this discrepancy may be explained by the different sponsorship rates discussed above. But additional EBRI data also shows that workers under age 35 are less likely than workers 35-64 to take up employer-sponsored retirement plans when their employer offers them.³

The participation rate drops sharply once workers reach age 65, falling from 50% for workers age 55-64 to 31% for workers age 65+. Part of this decline is likely due to the decrease in sponsorship rates discussed above. The decline could also reflect the breadth of this category, which encompasses all workers over age 65, some of whom may have the need to save and some of whom may not.

Discussion Questions

1. Given the large percentage of workers without access to employer-sponsored retirement plans, what social responsibility do companies have to their employees?
2. How might different kinds of plan designs help employees catch up if they have not had the opportunity to start saving through a previous employer?
3. How can employers encourage employees of all ages – particularly younger employees – to enroll in employer-sponsored retirement plans when they are offered?  What are the advantages and disadvantages of using automatic enrollment?