Did you know that half of American workers lack company-sponsored retirement plans? Or that just 45% of businesses with fewer than 100 employees offer 401(k)s? Is this indicative of future problems? Are today’s 401 (k) plans in trouble?
Two-thirds of Americans either work part time, they change jobs often or they work for smaller businesses, all of which can lend to a lack of retirement savings. Couple this with the fact that we’re living longer and the potential for problems become clear. Now, though, with many feeling like we’re not completely out of the recession and with fears of a new recession and massive layoffs, few workers are saving anything aside. In fact, just 8 percent of taxpayers 
eligible to set aside money in an IRA or Roth IRA did so in 2010, according to the IRS. The numbers could drop even lower.
Social Security Woes
For years, Americans who earned lower incomes relied on Social Security. Now, though, we’re beginning to see middle class Americans, including those whose careers included otherwise profitable management positions, turning to the program. Unfortunately, many are now learning the average Social Security benefit, around $15,700 a year, means significant shifts in their spending and saving efforts. Gone are the five and six figure incomes.
Debra Whitman, chief public policy officer at AARP, explains, “There’s a huge coverage gap that needs to be addressed”.
So who’s at most risk? Millennials at startups and middle aged managers in their 50s who’ve gone from corporate jobs with benefits to small businesses without them. Some 58 percent of the 68 million wage earners with no company retirement plan in 2013 worked for a business with fewer than 100 employees. This, according to the Employee Benefit Research Institute, means many Americans are going to find the need to work well past their ideal retirement age.
Why are 401 (k) Plans in Trouble Now?
Teresa Ghilarducci, an economist at the New School who researches retirement policies explains that the current 401 (k) system was designed for a workplace that few recognize. The days of lifetime careers at one corporation with many benefits and a straight line into retirement are long gone. Many people haven’t been able to save as consistently as they’d like.
There are 10,000 baby boomers turning 65 each day and with each day that passes, concerns are mounting about how to fix a system that excludes so many.
My Retirement Accounts
You may recall last year, President Obama announced a new plan to address what’s now being referred to as a retirement savings crisis. The MyRAs allow those without a traditional retirement account to direct part of their pay into an account that invests in government bonds. Unfortunately, no state has put it into action. Three states, Washington, Illinois and Oregon anticipate a 2017 launch. No other state has made progress to any degree.
Even though the solutions are far and few between, it’s as important as ever to become proactive so that our retirement years are as enjoyable as we’d hoped.
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