Since the end of the recession more people are working for employers that offer retirement plans, and plan participation is up, according to a new report from the nonprofit Employee Benefit Research Institute — but most workers still have no retirement plan.
The data in the report is from the U.S. Census Bureau's latest Survey of Income and Program Participation (SIPP) on retirement plan participation, covering December 2011 to March 2012.
Some key takeaways are:
- 61 percent of all workers over age 16 had an employer that sponsored a pension or retirement plan for employees in 2012, up from 59 percent in 2009.
- Workers participating in a plan increased to 46 percent in 2012, up slightly from 2009 (45 percent) but below 2003 (48 percent).
- The vesting rate (the percentage of workers who say they were entitled to some pension benefit or lump-sum distribution if they left their job) stood at 43 percent in 2012, up from 24 percent in 1979.
- This change is largely due to the increased number of workers participating in defined contribution retirement plans (such as 401(k) plans), where employee contributions are immediately vested, and faster vesting requirements in private-sector pension plans.
- 401(k)-type plans were considered the primary plan by 78 percent of workers with a plan. Defined benefit (pension) plans were the primary plan for 21 percent of workers.
Take a look at notes from the Retirement Plan Participation: Survey of Income and Program Participation (SIPP) Data, 2012.
A secure retirement is every worker's dream, but successful retirement planning is what makes that dream a reality.
There are many tools and resources to help make the process a lot simpler and less daunting.
For instance, the U.S. Department of Labor, Employee Benefits Security Administration (EBSA) has a great online publication complete with interactive worksheets to help you with the process of retirement planning.
Taking the Mystery Out of Retirement Planning is available online and can also be requested in print.
We hope this resource is helpful!
From Phyllis C. Borzi, Assistant Secretary of Labor for Employee Benefits Security:
Women have made enormous strides over the past three decades, in the workplace and beyond – and it's important to reflect on the men and women who fought for the changes that have led to greater gender equality. One of those changes was introduced 29 years ago: The Retirement Equity Act became law, ushering in important protections for America's workers and their families.
As the assistant secretary for the Employee Benefits Security Administration, one of my chief responsibilities is to oversee the administration and enforcement of Title I of the Employee Retirement Income Security Act of 1974, which sets minimum standards for pension plans.
ERISA was and is an important law that protects the retirement savings of America's workers, but the law's original text had some significant shortcomings, and those shortcomings disproportionately affected women.
ERISA has strict prohibitions against the "alienation of benefits," so that creditors could not claim an employee's pension benefits. But as written in 1974, this also meant that divorced women were unable to obtain their fair share of their ex-husband's retirement benefits – even if a woman had forfeited a career of her own in order to support a husband or raise the couple's children.
MyPBA (My Pension Benefit Account) is our secure online service that lets you, the participant, handle certain common transactions with PBGC.
Participants in PBGC-trusteed plans can use PBGC's fast, free, and secure online service tool to apply for pension benefits, update contact information, adjust federal income tax withholding, and more.
Since generations accustomed to using technology are joining the ranks of retirees, this helps PBGC in enhancing technological resources, making your interactions with PBGC easier and more user-friendly.
The old system, which came online around 2004, has been decommissioned, while the new MyPBA recently got a facelift complete with features designed to give participants a more convenient option to calling the agency's Customer Contact Center.
Some of the new and improved items include:
- email communications
About 250,000 participants with MyPBA accounts are expected to use the new MyPBA system at some time in the future.
But, if you wish to call PBGC's Customer Contact Center, we'd still like to hear from you!
Right now, the Powerball jackpot stands at $425 million, but whoever wins it will probably be broke within a few years. That's what happens to 70% of winners, according to the National Endowment for Financial Education.
That made us think about retirement. (We know, we know... what doesn't?)
Lottery winners can choose to take annual payments, pay lower taxes on their newfound windfalls, and have 30 years before worrying about running out of money. But research shows that the vast majority of winners choose to take a windfall lump sum instead.
But those who take the lump sum apparently don't "invest" it so wisely.
So if you're the lucky Powerball winner, unless you plan to keep your job, think twice about how to fund your retirement, and whether to take your winnings all at once. Remember, that gigantic pot of money has to last your whole life, not just a few years.
And even if you don't win the lottery, beware of a lump sum of whatever size. It may look good now, but you take on the risk that you'll outlive it. Most folks do better with guaranteed income.