An Alarming Fall in Retirement Plan Participation

A CRS analysis of the Current Population Survey indicates that, among workers 25 to 64 years old who were employed in the private sector and worked year-round, full-time:

• Retirement plan participation has fallen for three consecutive years, declining from 58% in 1999 to 53.5% in 2002.
• Only 27.3% of workers at firms with fewer than 25 employees participated in an employer-sponsored retirement plan in 2002, compared to 47.8% of workers at firms with 25 to 99 employees and 66.6% of workers at firms with more than 100 employees.
• In 2002, there was relatively little difference in retirement plan participation among men and women in the private sector between the ages of 25 and 64 who worked year-round, full-time; 53.9% of men and 52.9% of women participated in a company-sponsored retirement plan.
• In 2002, only 45% of private-sector workers 25 to 34 years old who were employed year-round, full-time participated in an employer-sponsored retirement plan, versus 57% of workers 35 or older.
• Black, Hispanic, and other non-white workers were less likely to have worked for an employer that sponsored a retirement plan, and therefore were less likely to have participated in a plan. Fifty-nine percent of white workers in the private sector who were employed year-round, full-time in 2002 were included in a company-sponsored retirement plan, compared to 47.5% of black non-Hispanic workers, 31.1% of Hispanic workers, and 49.2% of other non-white workers.
• Workers who earned less than $20,000 in 2002 were just one-third as likely as those who earned $60,000 or more to have participated in a retirement plan at work.
• Part-year or part-time workers in the private sector were half as likely as workers employed year-round, full-time to have participated in an employer-sponsored retirement plan in 2002 (25.7% vs. 53.5%).

Why Should Americans Care?

According to the report, although Americans are living longer than ever before, most retire before age 65. Moreover, while the nation's population continues to grow, the decline in birth rates that followed the post-World War II "baby boom" and the continued lengthening of life spans will result in fewer workers relative to the number of retirees. These trends will affect the economic well-being of future retirees because pensions and Social Security benefits will be paid over longer periods of time; savings will have to be stretched over longer retirements; and Social Security benefits will have to be financed by a working population that is shrinking relative to the number of retirees.

This report is prepared by the Congressional Research Service, Library of Congress. For the full report, click here .

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