Why having access to a retirement savings plan matters

The retirement savings gap and the increasing need for long-term care as the population ages are problems the U.S. cannot afford to ignore.

That was the word from panelists during the Employee Benefit Research Institute Virtual Policy Forum’s session on how employers are responding to shifting state and federal responsibilities.

One-third of Americans ages 35-64 are projected to run out of money in retirement, representing an aggregate retirement shortfall of $3.3 trillion, said Bridget Bearden, EBRI research and development strategist.

Meanwhile, 3 in 4 workers said they expect to be caregivers for an adult in their immediate network, driving demand for paid leave and flexible work schedules. Four in 10 workers say they are likely to need long-term care as they age.

Many Americans struggle to anticipate and plan for long-term care needs, with 37% of current retirees saying they have don’t believe they have the financial resources to pay for care as they age. That percentage is significant, Bearden said, as the World Health Organization found Americans face a growing number of unhealthy years as their life expectancy continues to increase. Americans at age 60 face an average of 6.8 unhealthy years in their remaining lifespan.

Making the problem even worse is that the federal fiscal picture is impacted by increased government spending needed to support an aging population, said Dana Wade, vice president of federal programs with the Peter G. Peterson Foundation.

Federal debt is on an unsustainable path, she said, while Medicare and Social Security spending continue to climb. As the population ages, fewer workers will pay taxes to support each Social Security beneficiary. The number of workers who supported each beneficiary has gone to 2.7 in 2025 from 4 in 1965 and is projected to drop even further – to 2.2 by 2045.

Many workers lack access to employer-sponsored retirement savings

Nearly half of full-time and part-time private sector workers in the U.S. (47%) lack access to an employer-sponsored retirement plan, said Angela Antonelli of the Center for Retirement Initiatives at Georgetown University. This represents more than 59 million workers, two-thirds of whom work for small businesses with fewer than 50 employees.

“Employers are not required to help their workers save for retirement. And we are a small-business nation,” she said. “That means small businesses have challenges to offer these benefits.”

In addition, more than 23 million gig economy workers lack access to workplace retirement savings options, she said, further widening the retirement savings gap.

Having access to a retirement savings plan matters, Antonelli said, because 23% of the elderly households rely on Social Security for 90% or more of their retirement income. The 65+ population in the U.S. is expected to grow by 34% between 2020 and 2040.

Boosting private retirement savings is crucial to supporting a better quality of life for older Americans while constraining growth in the cost of government support programs, she said.

States are stepping up

States have been stepping up to fill the gap and give more private-sector workers access to ways to save for retirement. Antonelli said 17 states have established auto-IRA programs to automatically enroll workers in individual retirement accounts.

In these plans, workers have full control over their participation and can opt out of saving. The plans are portable and can stay with the worker when they change jobs.

“We need to help more American workers be more financially secure and make it easy for them to do it,” she said.

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