Half of all private-sector workers in the U.S. have no access to a retirement plan, study finds

According to a recent study from the Pew Charitable Trusts, about half of all U.S. workers in the private sector lack access to an employer-sponsored retirement plan. This means that approximately 56 million workers in the country are unable to save for retirement through their jobs. While these employees can save money on their own, many struggle to prioritize building a nest egg for the future over meeting their immediate financial needs.

The lack of access to retirement plans highlights the growing disparity between those who are able to save for retirement and those who are not. Nearly 30% of Americans over the age of 59 have no savings to rely on when they stop working. Employer-sponsored accounts like 401(k)s play a crucial role in helping workers save for retirement by automatically deducting money from paychecks on a pre-tax basis and often providing a company match.

Retirement expert Teresa Ghilarducci describes America’s retirement system as “deeply unequal,” with millions of workers facing barriers to building wealth without access to employer-sponsored retirement plans. While it is possible to save for retirement without a 401(k), many workers without access to these plans struggle to accumulate assets. Research shows that individuals are 15 times more likely to save for retirement if money is deducted automatically from their paychecks.

The Pew survey also reveals that low-income workers, earning $37,000 or less, are disproportionately affected by the lack of access to employer-sponsored retirement plans. This further exacerbates the challenges they face in saving for retirement and achieving financial security.

With Social Security projected to deplete its trust funds by 2034, millions of Americans may rely on the program as their primary or only source of income in retirement. However, without significant reforms, recipients could see their benefits cut by 20%, creating financial hardship for many. Congress has yet to take steps to shore up Social Security, leaving vulnerable populations at risk.

The findings from the Pew research serve as a wake-up call for policymakers and the public alike. Without action to address the disparities in retirement savings and strengthen programs like Social Security, those who can least afford it will be the most impacted. It is essential for lawmakers to prioritize reforms that ensure all Americans have access to retirement savings options and can achieve financial security in their later years.

This article was written by Aimee Picchi, the associate managing editor for CBS MoneyWatch, covering business and personal finance. With a background in financial journalism, Picchi brings a wealth of knowledge and expertise to her reporting on retirement and economic issues.