As Congress debates tax reforms that could fundamentally alter how people save for retirement, the Investment Company Institute tried to find out who offers plans today and what workers set money aside in these plans.
In its research, the ICI found most workers interested in saving for retirement are covered by an employer-provided retirement plan. Of those, nearly three-quarters had access to a pension plan through their own employer or their spouse's employer, and 93 percent of those with access participated.
Younger workers and those who don't make a lot of money are more likely to save for things other than retirement, like college education, buying a house or putting money away in an emergency fund.
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Older and higher earning workers are more likely to save for retirement and more likely to prefer having part of their compensation in the form of retirement benefits rather than cash.
Workers at smaller employers that sponsor retirement plans are as likely to participate as workers at large employers sponsoring retirement plans, the ICI found. Although only 17 percent of workers at firms with fewer than 10 employees have an employer that sponsors a plan—compared with 68 percent of workers at firms with 1,000 employees or more—if a firm sponsors a plan, roughly 80 percent of employees participate, regardless of firm size.
It is important for the United States to maintain a Social Security system that provides adequate benefits to workers with low lifetime earnings, the report found. Even the best-designed voluntary private-sector retirement system is unlikely to provide adequate resources to fund retirement consumption for workers who had inadequate resources while they were working.
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