Less than 60% of salaried Americans have access to an employer-sponsored retirement plan, according to a T. Rowe Price survey.
That was just one of the challenges facing the current retirement landscape that was discussed at the Baltimore-based financial giant’s mid-November press briefing.
Retirement-plan access is partly hampered by gender and racial inequities, said Rachel Weker, T. Rowe Price’s senior retirement strategist, who was one of four expert panelists. Retirement-plan participation rates are lower among Black and Hispanic workers than among their white counterparts.
The good news, said Jessica Sclafani, T. Rowe Price’s senior defined contribution strategist, is that initiatives are underway to get more workers into retirement savings plans. For instance, pooled employer plans (PEPs), a type of multiple employer plan (MEP) that was created by the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), allow employers of different types and sizes to band together to offer a retirement plan.
In addition, she said, 16 states sponsor a retirement savings program for private sector workers.
Michael Doshier, senior retirement strategist at T. Rowe Price, noted that MEPs and other “aggregated solutions” that pool resources to set up retirement plans are a large and growing trend.
Michael Davis, the firm’s head of defined contribution specialists, who moderated the panel, said that some two-thirds of the firm’s more than $1.2 trillion in assets under management are “retirement related.”
Beyond plan access is the question of plan adequacy, said Weker. Even among those with access to retirement savings accounts, many are coming up short. They just aren’t saving enough to meet their retirement goals. Again, there are great disparities by gender and minority status, she said; women and people of color tend to be far behind white men in their retirement savings levels.
“Thirty-eight percent of white workers started saving for retirement before the age of 30, whereas for Black workers that number is as low as 18%,” said Weker. The impact of delaying the start of asset accumulation is “not insignificant."
Why people fail to save enough for retirement is mostly related to them having other priorities. One-third of respondents in a recent survey acknowledged that they weren’t saving enough. “This is not an awareness issue,” said Weker.