If the warnings are correct, hordes of retired workers will outlast their retirement savings. The reason? They failed to participate in their company's 401(k) retirement plan or just didn't squirrel away enough of their paychecks in the plan.   

Thirty years ago, half of all workers in the United States had a traditional pension plan, according to the U.S. Department of Labor. That meant that in retirement, they received a decent-sized check in the mail each month. By 2010, the percentage of employees covered by a pension plan had slipped to 7%. Today, the lion's share of companies (69%) sponsor 401(k) retirement plans. But not all employees participate, and some who do participate fail to tuck away enough of their salaries to ensure an adequate retirement.

Although 74.4 million workers have amassed $3.1 trillion in savings in their 401(k) plans, according to a 2012 Deloitte study, that's a drop in the bucket. In a separate Deloitte survey of a broad base of employers earlier this year, 15% said less than half their employees participated in the 401(k) plan. With regard to participants' savings rate, employees in the half of the plans that required automatic enrollment were saving a paltry 3%, according to the Defined Contribution Institutional Investment Association.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.