Fewer than half of American workers qualify for a retirement plan through their job, a new study has shown, leaving millions at risk of being left with inadequate savings for later life.
Some 56 percent of the American workforce – or around 69 million people – do not have access to an employer-sponsored plan, according to research from the Economic Innovation Group (EIG).
The share is lowest in Florida, where only 33 percent of people have access to plans in the work place.
The second worst is Georgia, where only 37 percent of people are able to enroll in a retirement plan, followed by Rhode Island, where just 39 percent have access.
Employer-sponsored 401(K) plans provide workers with an automatic way to save towards retirement, while benefiting from tax breaks and matching contributions from the company.
Through analysis of Census Data, the study found that the retirement readiness of Americans is also determined heavily by income, with higher-earning households far more likely to be saving for retirement than those on a lower wage.
Only 30 percent of the low-income workforce – those earning less than $37,000, according to EIG – has access to a 401(K) or other employer-provided retirement plan.
Florida, California, and Connecticut are the worst-performing states, in which less than a quarter of low-income workers have a plan available.
This is particularly consequential in California, where 3.6 million low-income workers lack access to an employer-provided retirement plan – the most in the nation.
Even when low-wage Americans have access to a plan, they are less likely to participate in saving than higher-income workers, the research found.
The study also found there was a clear geographical divide when it comes to workplace plans. At 49 percent, the Midwest has the highest regional rate of access to employer-sponsored 401(K) plans or the like.
This is seven percentage points higher than the South, where only 42 percent of people have access.
‘If we don’t have the ability to get workers involved in generating a real nest egg, then it’s going to prove to be high rates of elderly poverty in those states long-term,’ Benjamin Glasner, associate economist at EIG, told CBS.
On the other side of the spectrum, however, Iowa is the best state for offering employer-provided retirement plans – with 58 percent of people having access to one. Despite this. only 50 percent of residents are enrolled in one.
Some 57 percent of people in Idaho, meanwhile, have access to a retirement plan at work, with 46 percent taking up the offer, and 55 percent of Montana residents do – with 45 percent signing up to a plan.
It comes after a landmark report earlier this month found that wealthy households have almost ten times more money saved for retirement than those on a middle income.
Analysis by the Government Accountability Office found that this gap had widened exponentially in the last two decades.
A high-income household has around $605,000 saved for their twilight years – compared to $64,300 in a middle-income home.
In 2007, these figures were $330,000 and $86,800 respectively.
On top of that, only one in ten low-income households have any money saved into a retirement pot – compared to one in five in 2007.
