For Most Workers, Retirement Savings Will Be Insufficient: Study

A majority of private sector workers — even those with 401(k) savings — will have inadequate retirement income, according to a study released last month by the Center for Retirement Research at Boston College.

As of 2010, research indicated that only 42 percent of full-time, private sector workers were covered by an employee-sponsored pension plan, compared to 50 percent in 1979. A full third of the workforce will be reliant entirely on Social Security. Both sources of retirement savings fall short of the 80 percent income replacement rate required to maintain a household’s standard of living. The study did not take into account home ownership or the possibility for equity income, but concluded that it has become necessary for the U.S. government to put policies in place that would create a “new tier” of retirement income.

“The fact that less than half of the full-time, full-year workforce is covered by an employer-sponsored pension at any moment in time has two important implications for retirement income,” said payroll services midtown nyc. “First, a large share of households will end up at retirement without any pension and entirely reliant on Social Security. Second, projections of 401(k) accumulations based on steady contributions are not realistic.”


Although there’s been an overwhelming shift to 401(k) plans in the private sector, a Federal Reserve survey showed that accumulations in those accounts have typically been much lower then their projected levels, for a variety of reasons. For instance, many people don’t volunteer to participate in 401(k) programs until several years after their entrance into the workforce. Others make small withdrawals in lean times. And with the increased potential for job mobility, many people move in and out of coverage over the course of their careers. 

According to the study, closing the retirement income gap for workers in the private sector begins by identifying who isn’t covered by pension plans and investigating the reasons. Then policymakers can begin putting measures in place that ensure that more of the workforce is covered by pension plans and, ultimately, create a new tier of retirement income.

Written by G. Stewart

Join the Conversation (1)

see all

This is a professional community. Please use discretion when posting a comment.

  • Trying to support anything by using a BCCRR Study alone is a strong mark of needing substandard research to support an absurd agenda.  There are sufficient studies by far more credible research centers pointing out exactly the same problem but without suggesting such a questionable, irresponsible, and unimaginative means to the ultimate solution.

    Since 46% of employees are covered by “employee-sponsored retirement plans” as stated in the second paragraph, what in the world are they?  Even a 401(k) plan which may be supported by employee contributions only is not an employeE-sponsored retirement plan; such plans are employeR sponsored (ending capital letters intended for the sake of sufficient contrast).  If the guest columnist is so careless with terminology, one wonders if that person even understands the basic issues presented. 

    In the article we find its agenda:  “…policymakers can begin putting measures in place that ensure that more of the workforce is covered by pension plans and, ultimately, create a new tier of retirement income.”  This is exactly the sophomoric conclusion of the study.  “To ensure that more of the workforce is covered…” clearly indicates that the referenced group of policymakers are those in the federal government since it has the only group of “policymakers” which can “ensure” such a result.

    Can the federal government solve all problems or provide an endless source of wealth to plug all financial holes in our society?”  The Great Society of LBJ did a lot but it could not solve all ills.  The BCCRR “study” is more propaganda than high quality research paper.  The conclusion in the BCCRR solution is more “hallucinogenic” than practical solution especially with a possible new round of foreclosures looming in the near future.  History is full of such rhetoric such as the proposals of the infamous Argentine dictator Juan Peron.

    There is nothing wrong with allowing such ridiculous and wasteful “studies” to be published by BCCRR.  There is something very wrong with recognizing them as reasonably or rationally credible presentations of the problems we face and the means for solution we should adopt.

string(107) ""

Share your opinion