Too many U.S. workers aren’t building nest eggs

Once again, data confirm that American workers are falling short in building financial security for retirement.

One-third of U.S. employees don’t have access to employer-sponsored retirement plans. And, among those who are offered access, participation rates can be spotty.

A report from Pew Charitable Trusts, based on the U.S. Census Survey of Income and Program Participation, says nearly three-fourths of workers are participating in workplace-based retirement plans when their employer contributes to the plan.

That participation rate drops to about half if there’s no employer contribution.

But, the Pew report notes, there are significant barriers to plan participation, with or without employer matches. Workers cite personal debt, other saving priorities — such as saving for college or home buying — and day-to-day financial needs as reasons for nonparticipation.

Even among workers who do participate in retirement savings plans, the savings aren’t amounting to much. The report says the median amount in a retirement savings account is only $22,000.

To put that in perspective, that’s only $6,000 more than the median Social Security retirement benefit of about $16,000 that retirees claims in a single year.

Odds for building retirement savings improve with full-time employment status. Two-thirds of full-time workers have access to employment-based plans compared to 44 percent of part-time employees.

The research also reveals that good intentions — to save for retirement — sometimes are quashed: About 1 in 5 workers who have saved money in employer-sponsored plans have taken loans from the plans’ balances.

Logically, “borrowing against retirement savings can defeat its purpose,” the report states.

“While loans and other withdrawals before retirement might hurt retirement savings, the use of loans may also point out the fact that many Americans do not have much in the way of short-term savings. Forty-one percent of households report that they would not be able to cover a financial shock of $2,000.”

This story was originally published September 15, 2016 at 5:32 PM with the headline "Too many U.S. workers aren’t building nest eggs."