Retirement Savings and the Poor Financial Behaviors of Workers

Participation rates in 401(k) and 403(b) pension plans are not as high as they ought to be. According to a study by Access Research, average participation rates for 401(k) plans are about 78 percent, compared to 30 to 35 percent for 403(b) plans (Harrison, 1997).  "While three out of four workers in firms with over 1,000 employees participate in a pension plan, only one in four workers in firms with fewer than 100 employees participate in a pension plan" (Berg, 1997). Fully half the people who do retire do so with no pension plan (Berg, 1997).

According to the Public Agenda/Fidelity study titled Miles to Go: A Status Report on Americans' Plans for Retirement, "three in 10 of the Americans closest to retirement say they have personally saved less than $10,000 for the years they are no longer working" (30% of Americans..., 1997).

A Consumer Federation of America/NationsBank study on financial planning finds that Americans are "ignoring important goals" such as retirement (Bailey, 1997).

The Workforce 2020 report of the Hudson Institute concludes that increasing numbers of workers will be "forced to stay on the job because they cannot afford to retire" (Swoboda, 1997).

The lack of active participation in planning for one's retirement is not solely the result of an absence of a matching contribution from employers, although that is an important factor.  More than half of 401(k) and 403(b) sponsors contribute to employees' retirement accounts.

 

Download Report