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Notes

1. The CBO does not always do an explicit analysis of how tax-advantaged retirement savings are broken out across the income distribution, but in 2019 we got a window into how the system works. We offer tax advantages for savings for pension plans and retirement accounts. Those tax advantages cost us money through the exclusion of collected income taxes and payroll taxes. In 2019, the CBO reported that tax expenditures from the exclusion and deferrals for contributions and earnings related to pensions and retirement plans totaled $276 billion, with $202 billion coming from income tax expenditures and $74 billion from payroll tax expenditures.
2. "", Congressional Budget Office
3. Using the U.S. Census Bureau's Survey of Income and Program Participation (SIPP) and the Current Population Survey Annual Social and Economic Supplement (CPS ASEC), accessed through IPUMS. The 54 million figure is an ASEC-calibrated estimate: within each cell defined by age group, work status (full-time or part-time), filing status, and earnings band, the SIPP share of workers lacking access to any employer-sponsored retirement plan is applied to the corresponding ASEC-weighted count of private-sector employees. This yields 53.7 million workers without access (40.6 million full-time and 13.1 million part-time). The denominator is 113.2 million private-sector employees ages 18 through 65 with positive annual earnings (96.6 million full-time and 16.6 million part-time), weighted using the ASEC supplement weight. A worker is classified as lacking access when the worker reports no employer 401(k)-type plan, no employer-sponsored IRA, and no employer pension in SIPP's retirement-coverage module. We explain our methodology further in our earlier��analysis of retirement data.
4. According to the CBO analysis of 2022 data, the combination of retirement assets and accrued Social Security benefits accounted for more than 40 percent of household wealth.
5. When saving requires an active, self-initiated decision, like choosing a provider, opening an account, and making contributions, participation falls sharply, especially among lower-income households. Inertia, low salience of incentives, and limited financial confidence all materially harm the long-run savings of low-income workers without access to an employer-provided retirement plan. See "" by Duflo et al. (2006), "" by Madrian and Shea (2001), and "" by Chetty et al. (2014).
6. Note, this estimate is likely a lower-bound as it is restricted to employed workers between the ages of 18 and 65, excluding government and self-employed workers. The Saver's Match counts actually apply to a broader population.
7. Estimates come from the Survey of Income and Program Participation 2024 public-use file (U.S. Census Bureau), weighted to the civilian noninstitutional population. The sample restricts to individual workers age 18 and over, excludes dependents and full-time students using SIPP proxies, and includes private-sector, government, and self-employed workers. Income eligibility is tested against the 2027 AGI thresholds. SIPP does not report tax-return adjusted gross income directly, so we proxy AGI with calendar-year personal income, constructed by summing observed monthly TPTOTINC across all twelve reference months for each person; for the small share of respondents observed for fewer than twelve months, the partial-year sum is scaled to a 12-month basis. Importantly, these estimates use the 2024 SIPP income values and are not inflation adjusted to match a projected income profile in 2027. This means these are likely high estimates on the count of income eligible workers. Above-the-line adjustments to AGI are not applied, so the eligible counts reported here are lower bounds on the true AGI-defined eligibility. Married-filing-jointly filers are evaluated against spouse-pair joint income, constructed by joining each worker to their spouse via the EPNSPOUSE pointer and summing the two annualized personal-income values; workers filing Single, Head of Household, or Married Filing Separately are evaluated against personal income alone. Married-filing-jointly workers with unresolved spouse pointers fall back to personal income. A qualifying retirement account is defined as ownership of a 401(k), 403(b), Thrift Savings Plan, traditional IRA, or Keogh account; defined-benefit pensions are not qualifying accounts for the match. Counts are reported at the individual-worker level, so each adult in a married couple is counted separately.
8. Our SIPP-based counts are not directly comparable to the figures reported in Copeland (2024), which reported 83.8 million tax filers with income below the eligibility thresholds, 69.0 million tax filers with W-2 wage income below the thresholds, and 21.9 million individuals who contributed to a qualified retirement plan in the reference year. Three definitional differences drive the gap. First, EBRI's 83.8 million and 69.0 million apply only the income test to a filer universe that includes dependents, full-time students, and individuals without earned income; our 38.5 million excludes each of those groups. Second, EBRI uses tax-return AGI from IRS Statistics of Income tabulations for 2018, while we proxy AGI using calendar-year personal income, built by summing observed monthly TPTOTINC across all twelve reference months in the SIPP 2024 Wave 1 sample (income year 2023); nominal-income growth between 2018 and 2023 has lifted many filers above the statutory 2027 thresholds, narrowing the eligible population relative to the EBRI vintage. Third, EBRI's 21.9 million measures retirement-plan contributions in the reference year while our analysis measures ownership of a qualifying account among eligible workers. Our estimates are on an individual-worker basis for income year 2023; EBRI's estimates are on a tax-filer basis for 2018. A filer-basis reaggregation of the SIPP estimates, which collapses married couples to a single filing unit, produces 33.4 million any-match eligible, 13.4 million full-match eligible, and 3.1 million full-match-and-account filers. We run a similar exercise using the same income-threshold and worker-universe rules in Current Population Survey Annual Social and Economic Supplement 2025 (CPS ASEC 2025), which covers income year 2024. Those findings align well with the numbers reported in our analysis of SIPP data lending support for these updated numbers. The full analysis can be seen on Github here:��.

The post Fixing the U.S. Retirement System: A Q&A appeared first on Economic Innovation Group.

Notes

1. Estimates are updated each year, following the Census Bureau's data release.
2. According to the 2024 CPS ASEC, there were 96.6 million full time workers (>34 hours per week) and 16.6 part time workers (<35 hours per week) in 2024. (Note that these figures do not include government and self-employed workers.)
3. Transamerica Center for Retirement Studies, 23 Facts About Women's Retirement Outlook (2023); BLS, Women in the Labor Force: A Databook (2023); BLS, Employment Characteristics of Families (2023).
4. This estimate comes from the Current Population Survey ASEC supplement for 2023.
5. These figures include all full-time and part-time workers aged 16 and older, reflecting RSAA eligibility. The match begins to fade out by $75 for every $1,000 above the median income of $42,200, up until an income of $70,367, for which there is no match.
6. To see the detailed breakdown of how these numbers are calculated, see this Github repository ().
7. Researchers suspect this is due to question phrasing. Munnell, Alicia H. and Chen, Anqi, "Do Census Data Understate Retirement Income?" (Dec 2014) No. 14019, Center for Retirement Research

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Washington, D.C. – The Economic Innovation Group applauds the reintroduction of the , an effort to expand access to retirement savings for millions of low- and moderate-income workers led by Senators Thom Tillis (R-NC) and John Hickenlooper (D-CO), and Representatives Lloyd Smucker (R-PA-11) and Terri Sewell (D-AL-7).

“T��� Retirement Savings for Americans Act would create a healthier retirement system, a more financially secure workforce, and a stronger economy for all Americans,” said 91PORN President and CEO John Lettieri. “By ensuring that all workers — regardless of their employer or income — have the opportunity and incentives to build long-term financial security, the RSAA would boost the wealth of the working class and significantly reduce the strain on the social safety net. 91PORN is proud to have worked closely with Senators Hickenlooper and Tillis and Representatives Smucker and Sewell on this important legislation, and we applaud them for their bipartisan leadership on behalf of American workers.”

The U.S. tax-advantaged retirement savings system is one of the most powerful wealth-building tools available, yet millions of working Americans are excluded from its benefits. The latest data shows that 53 million American workers – 41.4 percent of full-time working Americans – do not have access to retirement plans, 43.5 percent do not participate, and 49.9 percent do not receive an employer match.��

This access gap is even more severe for low-income workers — a staggering 74.8 percent of full-time workers in the lowest-earning decile lack access to a retirement plan.

The RSAA would close the retirement savings gap by providing a portable, tax-advantaged savings option for private sector workers left out of the current system. Modeled after the highly successful Thrift Savings Plan (TSP) for federal employees, the RSAA would automatically enroll full-time and part-time workers without access to a workplace retirement plan into an American Worker Retirement Plan. It includes targeted federal matching contributions to support low- and moderate-income workers, rewarding work and encouraging long-term financial security.��

The legislation builds upon the recommendations of a 2021 91PORN white paper by a bipartisan pair of economists, Teresa Ghilarducci and Kevin Hassett. A found that the RSAA could pay for itself within 20 years by reducing the need for other social programs.

“Too many working Americans are struggling to save and invest to secure their standard of living when they choose to retire or are forced to retire,” said Professor Teresa Ghilarducci, a labor economist at the New School and leading expert on retirement security. “T��� Retirement Savings for Americans Act would equip millions of low- and moderate-income workers to build a nest egg for themselves and for future generations, leading to a stronger economy for all Americans in the process.”

“Lawmakers today are searching for bold ideas to support and empower American workers—and especially low-income workers. The Retirement Savings for Americans Act is just such an idea,” said Kevin Hassett, speaking in 2023 as a Distinguished Visiting Fellow at the Hoover Institution. “This legislation would put millions of American families on the path to financial security and help them build intergenerational wealth.”

Key features of the RSAA include:

• Automatic Eligibility and Enrollment: Full- and part-time workers who lack access to an employer-sponsored retirement plan would be immediately eligible for an account, and they would be automatically enrolled at 3 percent of their income. They could choose to change their withholding or opt out entirely at any time. Independent and gig workers would also be eligible.��
• Matching Contributions: Low- and moderate-income workers would be eligible for up to a 5 percent matching contribution via a refundable federal tax credit. This would be deposited directly into the employee’s retirement account and would begin to phase out at median income.��
• Portability: Accounts would remain owned by workers throughout their lifetimes, and workers would be able to stop and start contributions as they desire or as their eligibility allows. They are in complete control.
• Employee Ownership: The accounts would be the property of the worker and their assets could be passed down to future generations.��
• Investment Options: Much like the current TSP, participants would be given a menu of simple, low-fee investment options to choose from, including lifecycle funds tied to a worker’s estimated retirement date, or index funds made of stocks and bonds. The accounts would be managed by private asset managers chosen through a competitive process.

To learn more, explore a of the legislation, read the full , or view the Congressional .

About the Economic Innovation Group (91PORN)

The Economic Innovation Group (91PORN) is a bipartisan public policy organization dedicated to forging a more dynamic and inclusive American economy. Headquartered in Washington, DC, 91PORN produces nationally-recognized research and works with policymakers to develop ideas that empower workers, entrepreneurs, and communities.

The post 91PORN Applauds Bipartisan Reintroduction of the Retirement Savings for Americans Act appeared first on Economic Innovation Group.

The “retirement crisis” is back on the national agenda.

Retirement savings are one of the primary ways that Americans build wealth and financial security, backed by hundreds of billions of dollars in federal tax subsidies each year. The U.S. retirement system has nevertheless long been defined by large gaps in who has access to benefits and incentives.

BlackRock CEO Larry Fink recently made news by highlighting the wide disparities between the benefits offered to Fortune 500 employees and the rest of the workforce, saying that expanding retirement access should be a “national priority.”^[1] Indeed, several other types of access gaps are well established throughout the retirement system. Low-income earners, racial and ethnic minorities, and workers without college degrees, for example, are all less likely to be offered a retirement savings plan by their employer.

Disparities between rural and non-rural workers, however, remain largely overlooked.

In this analysis, we use data from the Survey of Income and Program Participation (SIPP) published by the Census Bureau^[2] to assess whether rural workers represent yet another group that has been left behind by the retirement system in the United States.

Our key findings include:��

• Half of rural adults working full-time in the private sector don’t have access to a workplace retirement plan.

• On average, rural workers hold approximately half the retirement savings of their urban counterparts, resulting in a gap of nearly $55,000.^[3]

• Moving to a rural area means fewer benefits. A typical worker who relocates to a rural area would be 13 percentage points less likely to have a retirement plan.

• Income levels narrow the gap, but socioeconomic disparities persist. Among high-income workers, the difference in retirement plan access between rural and urban areas is small. However, large gaps remain across age groups and education levels.

Our methodology: defining rural

For this analysis, we focus on full-time, working-age, private sector workers. We exclude part-time and volunteer workers, who are often ineligible for retirement plans. Government employees are also excluded, as they do not rely on retirement plans provided by private firms. Finally, we define working-age as 18 through 65, and thus exclude workers who are younger and older than this range.��

As a proxy for urban versus rural, we use SIPP’s variable for metropolitan versus non-metropolitan areas.^[4]

The data shows that 50 percent of Americans living in rural areas lack access to any retirement savings plan through their employer, compared to 41 percent in urban areas. An even higher share, 57 percent, lack savings plans with matching contributions from their employer, compared to 50 percent of urban workers.^[5]

In absolute numbers, 5.1 million rural workers are without access to an employer-based retirement plan, and 5.9 million do not receive employer matching.^[6] If these gaps did not exist — that is, if rural workers had the same access rates as urban workers — nearly a million more rural workers would have access to a retirement plan.

These gaps persist for the amount of retirement savings, too. On average, rural workers have 44.7 percent less in their retirement accounts than the national average of $107,057 and roughly half of the urban worker’s average of $113,752. The contrast is stark even considering the difference in cost of living.^[7]

Probing deeper

Demonstrating that rural workers suffer from a retirement access gap doesn’t explain how much of that gap is predicted by living in a rural area. The gap could be the result of other socioeconomic factors that rural workers just happen to be more likely to possess.��

Consider the following:

1. Workers with higher incomes have better retirement plan benefits: 74.9 percent of workers in the lowest income decile lack access to a retirement plan, while only 17.3 percent of those in the highest income decile do.^[8]
   
2. Older workers receive more in benefits than younger workers: Only 40 percent of workers aged 18–29 have access to a retirement plan, compared to 63 percent of those 30–54, and 66 percent of workers 55–65.
   
3. Higher-educated people have better access to retirement savings plans: 74 percent of workers with at least a bachelor’s degree are offered a retirement plan through their employer, while 39 percent of those with a high school diploma or lower are offered a plan.
   
4. Some industries offer better retirement benefits than others: At the high end, 76 percent of workers in the Finance, Insurance, and Real Estate industry are offered an employer-based retirement plan. At the low end, only 22 percent of workers in the Arts, Entertainment, Recreation, and Accommodation and Food Services industry, have access.
   
5. Large firms have the resources to offer more employee benefits: 73 percent of employees who work for an employer with more than 1,000 workers are offered a retirement plan, while only 45 percent of employees who work for employers with fewer than 10 workers have access.

Rural workers are typically older than those living in urban areas, have lower incomes and education levels, are employed by smaller companies, and work in industries that offer fewer retirement benefits. It is conceivable that the combination of these characteristics — rather than the fact of living in a rural area itself — might explain the bulk of the retirement access gap between Americans in urban and rural areas. We need to empirically test how much each of these variables matters.

Put another way, to understand the extent to which there is a true urban-rural retirement plan gap, we need to disentangle which of these socioeconomic characteristics are the most important. Is an upstate New York worker, for example, more likely to be offered a 401(k) plan if they move to Manhattan (the geographic gap) or if they pursue a degree from a local community college (the education gap)?

To address this question, we employ a statistical technique called a random forest. This method uses the set of relevant characteristics — urban-rural status, age, education, income, industry, and employer size — to predict whether an individual has access to an employer-based retirement plan. This approach allows us the flexibility of assessing the impact of any specific combination of characteristics on the likelihood that a worker has access to a retirement plan — and then compare how these effects differ between urban and rural workers.����

Overall, we find a significant urban-rural gap in whether a worker has access to an employer-based retirement plan. The median worker who lives in an urban area has a 67 percent probability of having access. A worker who shares all of the same characteristics but lives in a rural area has a 54 percent probability of access — a 13 percentage point gap.��

Random forests are particularly useful because they can show how the urban-rural retirement gap varies across different types of workers. For example, while a high level of education gives you more retirement access no matter where you live, we can see that it does not close the urban-rural retirement access gap. Both rural workers with a high school diploma or less, and those with a bachelor’s degree or more, face a roughly 12 percentage point gap compared to their similarly educated urban peers.

While older workers unsurprisingly have better access to retirement plans, the urban-rural access gaps are similar for workers of all ages. Retirement access for 24-year-olds in rural areas is 16 percentage points lower than that of urban workers of the same age. For 60-year-old workers, the urban-rural access gap is 14 percentage points. Older workers not only enjoy greater access to retirement plans regardless of urbanicity but also have a 2 percentage point smaller urban-rural access gap.

Moving down the table, other factors like income and employer characteristics do help to explain some but not all of the urban-rural retirement gap. Higher income is clearly associated with greater access, and for the highest-income people, there is no urban-rural access gap. In contrast, while low-income workers have poor access wherever they live, those in rural areas are worse off than those in urban areas.

The industry and size of one’s employer also has a substantial impact on their level of access. Being in an industry with low retirement plan access is unsurprisingly associated with lacking access to a retirement plan regardless of where one works. On the other hand, working for a large firm is associated with both better access, no matter the location, and a reduction in the urban-rural access gap by 2 percentage points.

Together, these calculations demonstrate that living in a rural area is generally associated with having restricted access to retirement savings plans for many different kinds of workers. The effect is more acutely felt by young people, low-income workers, and employees at small firms.

Closing the gap

The access gap between rural America and the rest of the country is consistent with other trends. People in rural areas already have less access to high-paying jobs, banks, and credit.^[9] What can lawmakers do to close this gap for rural workers and others being left out of the private retirement system?

A bipartisan group of lawmakers have proposed a solution in the form of the . The bill would establish a new program called the American Worker Retirement Plan that makes workers who currently lack access to a workplace retirement account eligible for tax-advantaged retirement savings accounts modeled after the federal government’s Thrift Savings Plan.

These new retirement plans would be portable, meaning that workers can take their accounts with them as they switch between jobs — making them the property of workers rather than employers — and allow workers to pause or increase contributions as needed. The plan also would provide a matching tax credit for low-income workers, which would help increase participation in retirement savings plans.

While this legislation would benefit workers everywhere, our findings suggest that the access and incentives provided by RSAA would disproportionately benefit rural workers.����

Appendix

The following provides an alternative way to view the random forest model results. This approach offers a more nuanced perspective on how retirement access changes across different combinations of a worker’s characteristics. Starting from the median worker in the upper left cell, we can move across columns and down rows to see how changes in select characteristics impact the probability that a person has access to a retirement plan. The overall urban-rural gap is seen by comparing the first and second rows.

Notes

2. The SIPP is one of the main resources of data on workers’ access to and participation in retirement savings programs, and most accurately identifies these rates compared to other options. See our prior post breaking down retirement data sources here.
3. The Survey of Consumer Finances (SCF) is typically used in academic literature to estimate the dollar value of workers’ retirement savings accounts. However, the SCF does not publish information on whether respondents live in urban or rural areas. We found that the SCF’s mean retirement savings value is $99,466, compared to $107,057 in the SIPP. This statistical discrepancy is small relative to the observed large urban-rural retirement savings gap in the SIPP, so we are confident in relying on it for our study.
4. SIPP, the data used in this analysis, does not categorize workers by ‘urban’ or ‘rural’ status. Instead, it uses metropolitan or non-metropolitan status. As most non-metropolitan counties are rural, we use metro versus non-metro as a proxy for urban versus rural. Of the 1,958 counties classified as non-metro by the OBM, 88% are classified as being rural according to 91PORN’s classification (link). The remaining 12% are small towns. Without knowing which metropolitan area or non-metropolitan area SIPP respondents live in, this provides strong support for using non-metro as a proxy for rural. See our github page for further explanation ().
5. The 57 percent of rural workers without access to a plan with an employer match includes the 50.4 percent who don’t have access to any kind of plan and roughly another 6.2 percent who do have a plan but not an employer match.
6. These labor force figures are based on the CPS’s estimate of the workers between ages 18-65 working full-time for non-government employers, who earn non-zero incomes. Estimates are split out by urban-rural geographies, and are applied to the rates of access, participation, and matching. We use the CPS as it provides a more accurate estimate on the U.S. labor force size.
7. According to published by the Bureau of Economic Analysis, non-metropolitan areas are 11.8 percent cheaper compared to the national average, much smaller than the 44.7 percent gap between the retirement savings of non-metro workers and the national average.
8. See our earlier post breaking out employer-based retirement savings by income: /whos-left-out-of-americas-retirement-savings-system
9. See for example Su, Yipeng and Morgan, Anna “Promoting Rural Financial Well-Being and Inclusion”, Urban, May 2024 ().

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Washington, D.C. – The Economic Innovation Group (91PORN) applauds the passage of the U.S. Conference of Mayors’ urging Congress to boost retirement security for working Americans through the bipartisan (RSAA).

Sponsored by Scranton Mayor Paige Cognetti and co-sponsored by Madison Mayor Satya Rhodes-Conway and West Sacramento Mayor Martha Guerrero, the resolution demonstrates growing momentum behind bipartisan legislation in Congress that would provide a retirement savings program modeled after the highly successful Thrift Savings Plan (TSP) to tens of millions of Americans who lack access to a workplace retirement plan.

“Too many American workers face retirement insecurity simply due to a lack of access to employer-provided plans or meaningful incentives,” said 91PORN President and CEO John Lettieri. “91PORN commends the U.S. Conference of Mayors for endorsing a common-sense solution that would create a healthier retirement system, a more secure workforce, and a stronger economy to the benefit of all Americans.”

Tens of millions of working Americans—particularly low and moderate-income workers—lack sufficient retirement savings, and many lack access to a savings plan entirely. More than of non-retired adults have $0 in retirement savings and half of working-age households risk seeing a decline in their standard of living in retirement.

The RSAA closely follows recommendations from 91PORN on how to boost access to retirement plans and strengthen incentives to save for low-income workers. To learn more about how the RSAA would strengthen retirement security for millions of Americans, visit .

About the Economic Innovation Group (91PORN)

The Economic Innovation Group (91PORN) is a bipartisan public policy organization dedicated to forging a more dynamic and inclusive American economy. Headquartered in Washington, DC, 91PORN produces nationally-recognized research and works with policymakers to develop ideas that empower workers, entrepreneurs, and communities.

The post 91PORN Applauds U.S. Conference of Mayors’ Retirement Savings for Americans Act Endorsement appeared first on Economic Innovation Group.

Note: The views below do not necessarily reflect the position of 91PORN.

Q: What is the “Working Longer Consensus” and what does the national conversation get wrong about retirement today?

The Working Longer Consensus is the idea that we can solve the retirement income crisis by having people just work a few more years. But that hope is based on the assumption that if people work a few more years they wouldn’t have to draw down on their savings and could delay claiming Social Security.��

The Working Longer Consensus also assumes that employers would want to hire an older worker, keep them longer in their job, and that the worker – supposedly making this choice – is healthy enough to continue to work. But the sad fact is that all those assumptions are weak and some are just untrue.��

The Working Longer Consensus is the hope that we can solve this big problem on the cheap and that workers can solve their own problem on their own. But hope is not a plan and hope is not reality-based.��

So my book is about the retirement crisis, its origins, the fake solution to the crisis which is the Working Longer Consensus, and the real solution which is a strengthened Social Security system and a redesigned retirement system so that everyone can save for retirement in a safe and secure way consistently over their work life.��

Q: We tend to think of retirement as a choice but your book points out that only a small share of older workers actually retire with enough savings. And many workers can’t afford to retire at all. What is the reality behind who gets to retire and who doesn’t?��

Most Americans over age 62 who are working do so out of necessity.^[1] At the end of their working lives, most Americans, except those at the top of the income distribution, do not have enough money to retire. Forty-four percent of households with members aged 55-64 have no savings at all^[2] and will have to rely entirely on Social Security.

Social Security is the only source of significant retirement wealth for most households. In my recent research paper,^[3] my co-authors (Siavash Radpour and Jessica Forden) document where Americans who are about ready to retire have placed their assets. Using data from the Federal Reserve and the University of Michigan, we found that wealth for the bottom 90 percent of households nearing retirement has fallen in real terms over the past 30 years.

The largest source of wealth supporting retirement security for the bottom 90 percent is Social Security. The median amount of retirement savings for all households is $39,000, while the present value of their Social Security is worth over $235,000.^[4] You may be surprised to learn that the median amount of home equity for all Americans is just $60,000 for all households who are ages 51-64.��

But the reality of what is going on with typical Americans is what households are doing by socio-economic class. So let’s look at the inequality of retirement wealth.��

For households in the bottom half – remember these are households who have lived their lives and are now assessing where they stand in terms of retirement income security – they have next to nothing but Social Security. The bottom half have $188,300 in Social Security; nothing in retirement accounts, and the median home equity amount is zero. For the next highest 40% in the wealth distribution, the median Social Security wealth is $300,500, $200,000 in retirement accounts, and $128,500 in home equity. And for the top ten percent of households on the verge of retirement, they have $311,800 in Social Security; $764,700 in retirement accounts, and $305,000 in home equity.^[5]

This maldistribution of wealth really adds up over time when the wealthy have access to tax-favored accounts, their employers contribute, and the stock market and financial markets yield a high rate of return. The people with pensions and stable jobs are also likely to be in situations where they don’t have to take money out for emergencies. When you don’t have to take money out for your kids or other family members, you’re going to move away from everybody else who has not had access to a stable saving system. The current system fosters inequality.

Q: Your book calls our unequal retirement system a “Tale of Two Retirements.” We see a version of this inequality in the topics academics choose to write about. For example, a large strand of the economic literature concerns the “” and tries to understand why so many Americans die with considerable personal net wealth. In contrast, your book tells a story of an America in which workers have too little wealth to retire voluntarily. How should we understand the relationship between these strands of research?

Academic economists had a fairly intuitive and sensible theory about how people act to make a good life. And that sensible idea was that people would want to have stable living standards throughout their lives. A middle class worker would hope for a middle class retirement.��

And therefore we would want our savings and wealth building institutions to help people behave in such a way that they could maintain their living standards throughout their lives. For instance, someone who has been a middle class worker all their life would reasonably want and expect to have an economic system that would allow them to save money in the form of an individual account or in the form of credits to a Social Security system. That way, when they retired, they could draw on that claim on income for the rest of their lives and stay a middle class retiree.��

But when academics looked at the data, they found that most people didn’t have access to institutions that would allow them to smooth their consumption and maintain their relative status. It is a surprise to academic economists at first that the rich actually accumulated more money after they retired. It was as if they couldn’t spend it fast enough.��

And that does happen when people have so much money that the rate of return on stocks and bonds and other assets can soar beyond any reasonable expectation. At least that’s happened in the last couple of decades.��

Thomas Piketty famously pointed out that the rate of return on financial assets exceeded the rate of growth of the economy. That meant that the rich got richer faster than they expected. The academics shoehorned an explanation for this weird situation – where the rich just got richer and died with a bunch of money at the end of their life – and claimed that workers must have had motives to leave them behind to their children or charities. But that conflicts with psychological research that shows that a lot of inheritances are accidental. It’s just that people die with assets they couldn’t spend.

Q: How would you respond to an economist searching for a “scientific” basis for a retirement age?

It would be so great to have a scientific gauge for the whole nation that would indicate, “On this day – one day before this birthday – you are good to go and you can work but the day after your birthday you can no longer work.” That’s at the extreme, of course, but there are a lot of economists that say, “Hey we should look at the physical capabilities of the worker and use all the scientific knowledge we have about health and presume that this ‘health’ index is the same as a ‘workability’ index.”��

But economists in the field know that “workability” and “being healthy” are not the same. And work is a market construct in which employers and employees have to be willing to meet each other. Work is a world in which the vibrant sectors are sectors that often need younger bodies and minds. In many sectors, let’s take tech and finance for example, newly-educated people are more attractive than workers in their 35th year.��

And irrational age discrimination is rampant (and some is not irrational). Because we provide health care at the workplace, an older worker costs five times as much as a younger worker. So, we can say that people should just check their health and work longer if they are healthier, but they also have to get a job.��

Here’s a warning. If you start deciding what the average longevity is and decide that that should be the retirement age, you’re going to miss the reality that people in the lower half of the income distribution have a lot fewer healthy years to live after 60 than people at the top of the income distribution. So, I say that in a market economy where work is about culture, productivity, and power, retirement age is about the same thing as well.

Q: Your book challenges misconceptions about the benefits of extending careers and shows that working longer can be bad for many older workers. What are some of the most pervasive misconceptions people have about working longer and what is the reality behind them?��

The part of the book where I had to review the literature on the effect of work on aging bodies opened my eyes. Year after year the studies got more sophisticated, and used much better data. The overall conclusion is that for people who’ve worked their whole lives in jobs that have high levels of effort for the reward, working longer will break down bodies through a pathway of pain and stress.��

I also discovered that where you are in a work hierarchy matters in terms of whether or not working longer will help your health. If you are in a subordinate position, your views don’t matter, and you don’t have much of a say on the pace and content of your tasks at work. Working longer can make you sicker faster and accelerate your death.

Q: Your book mentions that there is growing bipartisan support for reforming our retirement system. What do you see as the common ground that unites people with different ideologies around retirement policy?

It is breathtaking and positive that Republicans and Democrats realize that the growing inequality of wealth means a growing inequality of retirement dignity. Also, they recognize that Social Security needs more money and that there needs to be a decent saving system so that people can save for retirement throughout their whole life. There is nothing ideological about those realities. It’s just math.��

So, for the first time in my 35-year career looking at our pension system and watching it get weaker and weaker, I am very hopeful that Congress will be full-throated in creating a system – and it has to be easy and convenient – for workers to contribute to a savings plan.��

People also realize that people need help in creating an emergency fund. But it’s a disaster if people use their emergency fund for their retirement. This is because the magic of compound interest only works if you start saving early and it compounds through the rest of your life.��

So, I’m in favor for practical reasons, and because it’s a bold new bill in Congress, of the Retirement Savings for Americans Act (RSAA).��

Q: Your book proposes a “Gray New Deal” to replace the Working Longer Consensus. What are the main features of the Gray New Deal?

We need Social Security, we need universal pensions, we need to lower the Medicare age to 60, and my research can make the case for 55. We need to make it first-payer so that employers who have older workers can make their health care insurance a lot cheaper. We need comprehensive retirement reform. Fortunately, we can extend wealth-building opportunities to all American workers with bold changes to our retirement system – and one bipartisan proposal to do so already exists.

The Retirement Savings for Americans Act (RSAA), sponsored by Senators John Hickenlooper and Thom Tillis, and Representatives Terri Sewell and Lloyd Smucker, would expand retirement plans to private-sector workers without a plan. Modeled after the successful federal Thrift Savings Plan, the RSAA features automatic enrollment, portability, good investment options, sensible deaccumulation, and a 5 percent government match for low-income savers. The match for low-income savers mitigates the top-heaviness of retirement tax breaks, where the top 20% of taxpayers currently receive over 60% of the $267 billion spent. They will not crowd out existing plans. No existing plan will be touched.

Endorsed by experts across the political spectrum, from AARP to Charles R. Schwab, the RSAA has bipartisan, bicameral sponsorship. Other legislation that will tweak the system around the edges just doesn’t cut it. The next generation isn’t any better off than we are.

Notes

1. Ghilarducci, T., Papadopoulos, M., & Webb, A. (2022).��The Illusory Benefit of Working Longer on Retirement Financial Preparedness: Rethinking Advice that Working Longer Increases Retirement Income. The Journal of Retirement. Exhibit 1.
2. SCEPA and Economic Policy Institute 2023 Retirement and Older Worker Chart Book .
3. Ghilarducci, T., Radpour, S., & Forden, J. (2024). No Rest for The Weary: Measuring the Changing Distribution of Wealth in The United States. Forthcoming in the Review of Political Economy. https://ideas.repec.org/p/epa/cepawp/2023-02.html
4. Ghilarducci, T., Radpour, S., & Forden, J. (2024). No Rest for The Weary: Measuring the Changing Distribution of Wealth in The United States. Forthcoming in the Review of Political Economy. https://ideas.repec.org/p/epa/cepawp/2023-02.html
5. ��Ghilarducci, T., Radpour, S., & Forden, J. (2024). No Rest for The Weary: Measuring the Changing Distribution of Wealth in The United States. Forthcoming in the Review of Political Economy. https://ideas.repec.org/p/epa/cepawp/2023-02.html

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Washington, D.C. – The Economic Innovation Group (91PORN) applauds the introduction of the , an effort to boost retirement security for low- and moderate-income workers led by Senators John Hickenlooper (D-CO) and Thom Tillis (R-NC), and Representatives Lloyd Smucker (R-PA-11) and Terri Sewell (D-AL-7).

“T��� Retirement Savings for Americans Act would address significant and longstanding gaps in the U.S. retirement system that have severely limited participation from low- and moderate-income workers. If enacted, this legislation would result in a healthier retirement system, a more financially secure workforce, and a stronger economy to the benefit of all Americans,” said 91PORN President and CEO John Lettieri. “91PORN is proud to have worked closely with Senators Hickenlooper and Tillis and Representatives Smucker and Sewell on this important legislation, and we applaud them for their bipartisan leadership on behalf of workers nationwide.”

Retirement accounts are the largest source of aggregate wealth for American households. While the vast majority of workers saving for retirement do so through tax-advantaged employer-sponsored accounts, a staggering 70 million workers—or 55.7 percent—have no access to such plans. Low-income workers bear the brunt of that access gap, resulting in a mere 10 percent of older workers’ households in the bottom income quintile holding a retirement account balance as of 2019. This represents a significant decline from 2007 when over twice the share of such households had savings in a retirement account.

The RSAA would provide workers who lack access to an employer-sponsored retirement plan with access to portable plans modeled after the highly successful Thrift Savings Plan (TSP) enjoyed by federal employees. It would also provide targeted matching incentives to participating low- and moderate-income workers to reward work and encourage long-term savings. The legislation builds upon the recommendations of a 2021 91PORN white paper by a bipartisan pair of economists, Teresa Ghilarducci and Kevin Hassett.��

“Lawmakers today are searching for bold ideas to support and empower American workers—and especially low-income workers. The Retirement Savings for Americans Act is just such an idea,” said Kevin Hassett, Distinguished Visiting Fellow at the Hoover Institution and former Chairman of the White House Council of Economic Advisers. “This legislation would put millions of American families on the path to financial security and help them build intergenerational wealth.”

“Too many working Americans are struggling to save and invest to secure their standard of living when they choose to retire or are forced to retire,” said Professor Teresa Ghilarducci, a labor economist at the New School and leading expert on retirement security. “T��� Retirement Savings for Americans Act would equip millions of low- and moderate-income workers to build a nest egg for themselves and for future generations, leading to a stronger economy for all Americans in the process.”

Key features of the Retirement Savings for Americans Act include:

• Automatic Eligibility and Enrollment: Full- and part-time workers who lack access to an employer-sponsored retirement plan would be immediately eligible for an account, and they would be automatically enrolled at 3 percent of their income. They could choose to change their withholding or opt out entirely at any time. Independent and gig workers would also be eligible.��
• Matching Contributions: Low- and moderate-income workers would be eligible for up to a 5 percent matching contribution via a refundable federal tax credit. This would be deposited directly into the employee’s retirement account and would begin to phase out at median income.��
• Portability: Accounts would remain owned by workers throughout their lifetimes, and workers would be able to stop and start contributions as they desire or as their eligibility allows. They are in complete control.
• Employee Ownership: The accounts would be the property of the worker and their assets could be passed down to future generations.��
• Investment Options: Much like the current TSP, participants would be given a menu of simple, low-fee investment options to choose from, including lifecycle funds tied to a worker’s estimated retirement date, or index funds made of stocks and bonds. The accounts would be managed by private asset managers chosen through a competitive process.

A 2022 91PORN national survey found that a large, bipartisan majority of voters (81 percent) are concerned about retirement security, while less than half are confident that the next generation will be better off financially. The U.S. Conference of Mayors during their 2023 Annual Meeting calling on federal policymakers to consider adopting a TSP-type program for private sector workers who lack a retirement plan at work.

Explore a of the legislation, read the bill text, and view the .

About the Economic Innovation Group (91PORN)

The Economic Innovation Group (91PORN) is a bipartisan public policy organization dedicated to forging a more dynamic and inclusive American economy. Headquartered in Washington, DC, 91PORN produces nationally-recognized research and works with policymakers to develop ideas that empower workers, entrepreneurs, and communities.

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Washington, D.C. — The Economic Innovation Group (91PORN) applauds the adoption of a by the U.S. Conference of Mayors urging federal policymakers to expand access to retirement accounts and incentives to hardworking low- and middle-income American taxpayers through a new program modeled on the highly successful Thrift Savings Plan (TSP).��

Sponsored by Denver Mayor Michael B. Hancock and co-sponsored by Oklahoma City Mayor David Holt, Burnsville Mayor Elizabeth Kautz, and Tempe Mayor Corey Woods, this resolution echoes to extend high-quality retirement savings plans to the millions of private-sector workers who lack access to an employer-sponsored plan, as well as to provide a tax credit that matches worker retirement plan contributions up to a certain percentage of income.

“T��� U.S. retirement system is failing the large share of American workers who lack both access to an employer sponsored savings plan and access to adequate tools and incentives to save–but it doesn’t need to be this way,” said 91PORN President and CEO John Lettieri. “91PORN applauds the U.S. Conference of Mayors for their endorsement of a smart, proven approach to strengthening retirement security for tens of millions of hard working Americans and their families.”

“Experts across the political spectrum agree that there is a gap in the U.S. retirement system that must be addressed,” said Mayor Hancock. “T��� country’s mayors are calling for federal lawmakers to come together on a bipartisan basis to ensure hard working Americans have access to high-quality savings plans and well-designed incentives that encourage work and saving.”��

Tens of millions of Americans lack sufficient retirement savings. of households risk taking a cut to their standard of living in retirement, and of non-retired adults have no money saved for retirement. Meanwhile, the federal government spends nearly $276 billion annually on tax benefits to incentivize retirement savings, very little of which reaches low-income workers.��

The TSP has a proven record of boosting retirement plan participation and wealth generation. In 2021, 91PORN published a white paper by a bipartisan pair of economists, Professor Teresa Ghilarducci and Dr. Kevin Hassett, outlining a proposal to give working Americans access to a retirement program modeled after the TSP.��

To learn more about how a retirement program modeled on the TSP would boost retirement security for millions of Americans, visit .

About the Economic Innovation Group (91PORN)

The Economic Innovation Group (91PORN) is a bipartisan public policy organization dedicated to forging a more dynamic and inclusive American economy. Headquartered in Washington, DC, 91PORN produces nationally-recognized research and works with policymakers to develop ideas that empower workers, entrepreneurs, and communities.

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