Lately, there’s been a lot of talk about income inequality – the increasing gap between our society’s highest-paid workers and the lowest-paid. Generally the term “income inequality” is used to highlight the difference in wages and salary for people while they’re working. Now, new data from the latest National Compensation Survey point to a different form of inequality – retirement income inequality.
According to the new data, only 40 percent of lower-wage workers in the private sector have access to an employer-sponsored retirement plan while 86 percent of higher-wage workers do. The data also show that even if people have access to a retirement plan at work, they don’t always participate. Only 19 percent of lower-wage private-sector employees participate in a plan versus 75 percent of higher-wage employees. This gap can be explained by the fact that low-wage workers are less likely to have extra income to stash away in a retirement plan.
The charts below illustrate the fact that low-wage workers are more likely lose out when it comes to being offered an employer-sponsored retirement plan, and also are less likely to participate in a plan.
We already know that there is a $7.7 trillion Retirement Income Deficit. Isn’t about time that we begin closing this gap by making sure that all workers have adequate savings for retirement?
A start would be to make sure that everyone has access to a retirement plan. We’re glad that initiatives to provide uncovered private-sector workers with access to state-administered retirement plans – like those recently-passed in Oregon and other states – are gaining traction. But much more needs to be done to ensure that all Americans have secure and adequate income in retirement.