How to Safeguard a Secure Retirement for All American Workers

A financially secure retirement should not be a dream but a right. Yet, 40% of Americans are projected to run short of money in retirement. Many of our parents and grandparents may have had pensions and Social Security checks that offered steady income to help cover living expenses in retirement. But for most workers today those reliable sources no longer exist or aren’t enough. Even among those already in retirement, many have encountered financial challenges, especially amid recent high inflation, necessitating a return to work and a pause on their retirement dreams. Still others reach retirement age only to realize they have not saved enough to make ends meet. Our current retirement system focuses almost entirely on helping workers save for retirement; it does little to help retirees turn their savings into the income they need, or make sure that income will last as long as they live. As tens of millions of baby boomers leave the workforce and people live longer in retirement, the consequences of not having enough income and savings pose significant risks for the security and vitality of our families, communities and economy, increasing the risk of poverty among older Americans and putting greater stress on an already-strained social safety net.

Expanding access to retirement plans

Common-sense solutions can ensure all workers attain their retirement rights—if policymakers and employers act with the necessary urgency. Recent laws took steps toward further expanding access to retirement plans and alleviating barriers to saving, and private-sector innovations are enabling more employers to offer plans with greater flexibility, customization and investment variety. Yet, Americans need and deserve more to realize a dignified retirement. First, we need to level the retirement savings playing field, making sure more workers have access to retirement savings plans by expanding government-provided alternatives. Almost half of private-sector workers—more than 55 million—do not have the option of an employer-sponsored retirement plan. That figure is even more alarming for small-business workers: 78% of those who work for companies with less than 10 employees—roughly 20 million Americans—don’t have a workplace retirement plan option. The federal government and more states should create individual retirement accounts (IRA) for workers without employer plans available to them. To date, 19 states have enacted such IRA-for-all plans for private-sector workers, which would require employers that don’t offer retirement plans to allow their workers to be automatically enrolled in plans facilitated by their state. Second, more employers should adopt auto-enrollment policies for their retirement savings plan to jump-start their employees’ retirement savings and make sure workers are participating in this essential benefit. They should also include measures that enable workers to grow their savings as they advance in their careers and allow them to seamlessly take those savings with them if they change jobs. Third, every worker should also be provided with clear, simple information to compare savings and income options and make informed choices in order to reach their retirement goals. Employers should implement workplace financial education programs so that employees continue to learn and take action. When we know better, we do better. Finally, as our retirement system completes its shift away from relying primarily upon defined benefit plans—pensions—we need to adjust our focus from simply helping people save to also making sure those savings last. Every worker should have access to low-cost investment options that provide ample retirement income.

Providing reliable retirement income

For much of the 20^th century, the combination of a pension and Social Security—the bedrock of America’s retirement system—helped to replace many workers’ income in retirement. In 1975, 70% of retirement plan participants had a pension and the corresponding promise of guaranteed lifetime income. Today, just 12% have such a plan. Social Security—many retirees’ only source of guaranteed income—continues to confront solvency challenges, with the Social Security Trust Fund projected to run out of money by 2033, meaning beneficiaries will face a cut in benefits of more than 20%. Policymakers and employers alike must act to provide all workers with sensible, dependable payout options, such as annuities, to serve as income throughout retirement. We’ve made significant progress over just the last few years to enable greater retirement savings and access to lifetime income. Congress passed two meaningful, bipartisan laws—the SECURE Act and SECURE 2.0 Act, in 2019 and 2022, respectively—that offer more American workers than ever a retirement savings plan option. But there’s more work to do to realize workers’ retirement rights, ensuring they have the tools, resources and contribution matches that put a comfortable retirement within reach—no matter the type of work or employer. It’s time that policymakers and employers join together to help all workers exercise their retirement rights and achieve the dignified, secure retirement they have earned.