Not everyone participates in a retirement plan, but in some states, a sizable share of workers don’t even have access to benefits such as 401(k)s or any employer-sponsored defined benefit contribution plans, according to a recent study.
Today, only 58% of U.S. workers have access to a retirement plan, while just 49% actually participate in one, says a recent analysis of data compiled by The Pew Charitable Trusts, a non-profit global research and public policy organization.
In the report, “Who’s In, Who’s Out: A Look at Access to Employer-Based Retirement Plans and Participation in the States,” Pew analyzes the access and participation rates in employer-sponsored retirement plans in all 50 states. Not only do access and participation rates vary across states and regions, but the difference between the best and worst performing areas is substantial.
Of all states, Florida had both the lowest access and participation rates, with 46% of workers having access to employer-sponsored retirement plans and 38% of workers actually participating in said plans, according to Pew.
Pew’s analysis is based on a pooled version of the Census Bureau’s Current Population Survey and Annual Social and Economic (ASEC) Supplement. The research defines “worker” as a full-time, full-year private-sector wage and salary employee ages 18-64.
At the other end of the spectrum, Wisconsin ranked as the state with the highest rates. There, 70% of workers have access to a plan—a difference of more than 20 percentage points compared to Florida—while 61% of workers participate in an employer-sponsored retirement plan.
Regionally, the differences were also significant, with higher access and participation rates in the Upper Midwest, along with parts of New England and the Pacific Northwest. Meanwhile, rates were found to be generally lower in the South and West, according to Pew’s analysis. Access rates ranged from 54% in the South to 65% in the Midwest, while participation ranged from 46% in the South to 56% in the Midwest.
Other states with low access rates (30% or less) include common retiree havens such as California, Texas, Florida, the Carolinas, as well as Arizona, New Mexico and Louisiana. On average, the access rate for part-time workers in all 50 states is 33%.
As for participation rates, the U.S. average of which is 18%, states who scored lower (15% and below) included, Texas, Florida, New Mexico, North Carolina, Georgia, Louisiana, Oklahoma, Mississippi, Tennessee, Arkansas and Wyoming.
“Access to workplace retirement plans varies widely across the states,” said John Scott, director of Pew’s retirement savings project, in a prepared statement. “Recognizing the savings challenge faced by so many Americans, half of the states are looking at their own solutions.”
Lawmakers have already made moves to help more Americans save for their later years, by introducing measures to either create or study state-sponsored retirement savings plans for employees who do not have access to such a plan in the workplace.
For example, in Illinois, which established the Secure Choice Savings Program, will begin enrolling certain workers into new payroll-deduction retirement accounts by 2017. In Washington state, there has been the creation of a marketplace in which small employers and the self-employed can shop for retirement plans.
“The ability of employees to contribute directly from their paychecks and the use of features such as automatic enrollment make the workplace an effective place to encourage saving,” writes Pew.
As many studies and reports have illustrated, saving for retirement is more important today than ever before. Whether fueled by the vast aging of the nation’s population, a continued decline in the availability of traditional pensions, growing concerns about Social Security’s future, or the long-heralded warnings that today’s Americans are not fully prepared to face retirement, the cards are already stacked against U.S. workers and they are piled high.
“Workplace retirement savings plans can be a critical piece of the retirement security puzzle,” Scott said. “But for millions of Americans, this piece is missing.”
Because access and participation rates differ widely nationwide, Pew suggests legislators should consider the unique social and economic factors of each state as they attempt to expand retirement saving through the workplace.
While some states may employ works at small businesses or within industries with relatively high turnover, other states have higher shares of minority workers who may benefit from targeted outreach in efforts to expand participation in new or existing retirement plans.
“Policymakers will need to balance the goal of increasing retirement savings against the challenges and concerns that such firms face,” writes Pew. “Taking these types of characteristics into account can help policymakers improve retirement security while balancing the needs of both workers and employers.”
View the Pew Charitable Trusts report.
Written by Jason Oliva