ICI study shows retirement plan participation continues to increase

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A recently released Investment Company Institute (ICI) study has found that workers’ participation in employer-sponsored retirement plans is significantly higher than suggested by some commonly cited statistics.

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The analysis showed nearly two-thirds of workers between ages 26 and 64 are participating in such plans, either directly or through a spouse, according to the study, Who Participates in Retirement Plans, 2016.

“By the time they retire, the vast majority of American workers will accumulate resources in employer plans,” Peter Brady, ICI senior economic adviser, said. “This is not well understood for two reasons. First, participation is often understated in household surveys, which are used to study participation. Second, many younger and lower-income workers who are not participating in retirement plans today will do so later in their careers.”

The ICI said younger and lower-income workers are the least likely to want to save for retirement, and thus less likely to search for an employer who offers a retirement plan or participate in a plan if given the choice. ICI’s study also noted that among workers between 26 and 64 years old in 2016, the probability an employee participated in a retirement plan at his or her workplace spanned the range of 22 percent for those who earned less than $20,000; 67 percent for those who earned $40,000 to $50,000; and 85 percent for those who earned $100,000 or more.

ICI said the study used tax data published by the Internal Revenue Service (IRS) Statistics of Income Division (SOI), with the tabulations including data on all taxpayers who were wage and salary workers in 2016.

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