Data and Research January 13, 2016

Retirement Plan Access Differs by Demographics

Access to employer-based retirement plans differs widely across states, an analysis finds.
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Wide differences in access to and participation in employer-based retirement plans exist across states, with variations by employer size and industry type as well as by workers’ income, age, education, race and ethnicity, according to a report released by The Pew Charitable Trusts.

The report, “Who’s In, Who’s Out: A Look at Access to Employer-Based Retirement Plans and Participation in the States,” found that 61% of workers in Wisconsin participate in an employer-based pension or retirement savings plan, compared with 38% in Florida. Access and participation is higher in the Midwest, New England, and parts of the Pacific Northwest—and lower in the South and West.

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The report also finds that among Hispanic workers, access to a plan is around 25 percentage points below that for white non-Hispanic workers (38% vs. 63%, respectively). Black and Asian workers also report lower rates of access than white workers.    

John Scott, director of Pew’s retirement savings project, notes that half of the states are looking at their own solutions. See “Will State-Run Plans Help Close the Coverage Gap?”   

Overall, Pew’s analysis, based on a pooled version of the Census Bureau’s Current Population Survey (CPS), found that 58% of private sector workers have access to a plan, while 49% participate in one. Pew also found that more than 30 million full-time, full-year, private sector workers ages 18 to 64 lack access to an employer-based retirement plan, whether a traditional pension or a defined contribution plan such as a 401(k).
Products January 13, 2016

Financial Engines Updates Planner for Social Security Changes

The Bipartisan Budget Act of 2015 introduced changes to Social Security regulations that limit households’ ability to use certain claiming strategies.
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Financial Engines’ Social Security Planner now supports changes to Social Security regulations enacted by the Bipartisan Budget Act of 2015.

The Bipartisan Budget Act of 2015 introduced changes to Social Security regulations that limit households’ ability to use some lesser-known Social Security claiming strategies. Financial Engines says these changes have been incorporated into the Social Security Planner to provide users with up-to-date guidance regarding benefit claiming strategies, to maximize their expected lifetime benefits and household income in retirement.

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The most significant Social Security regulations changes apply to individuals who will not have reached the earliest eligible claiming age of 62 by the end of 2015. These individuals will no longer be able to file restricted applications to receive only their spousal benefits. Second, starting six months after the passage of the act, when an individual suspends benefits, the associated benefits of their spouse, ex-spouse and dependents will also be stopped.

“Despite these changes impacting Americans’ Social Security claiming decisions, the general rule that it pays to delay still applies for most Americans,” says Wei-Yin Hu, vice president of financial research at Financial Engines. “For every year participants defer claiming Social Security, they still receive a six to eight percent increase in lifetime benefits.”

Married couples, however, will have fewer claiming strategy options once the changes go into effect, Financial Engines notes. “Certain qualifying households still have an opportunity to capitalize on these valuable and often overlooked strategies,” says Hu. “Couples using these sunsetted approaches could gain an additional $100,000 or more in lifetime Social Security benefits, so taking advantage of them could be incredibly worthwhile, if you qualify.”

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