Responding to Changing Retirement Savings Programs

Abstract

For many elderly Americans, the so-called threelegged stool of retirement income is a myth. One or two of the legs is missing. Employer-sponsored retirement plans have undergone a massive restructuring over the past decade, requiring knowledgeable decision making on the part of employees. There is a general sense that access to and participation in retirement savings plans are inadequate. Various private and public sector organizations have taken steps to address the problem, culminating in the 1998 Summit on Retirement Savings. The summit targeted employees of small employers, low-income employees and women and minorities as being of particular concern. A second summit is scheduled for September 2001. This article examines the changing structure of retirement savings and efforts to enhance them and analyzes the experience of the groups targeted by the summit. Its central findings are that when employees have access to a retirement income plan, they participate to a high degree. The experience of women is better than expected. That of racial minorities, especially Hispanics, is not. The crux of the retirement income problem is small employer sponsorship, not employees choosing not to participate.