The percentage of U.S. workers enrolled in employer-based retirement plans has declined over the past couple decades and "retirement inequality" has worsened since 401(k) plans were introduced in the 1980s.
Those were the big takeaways of a study by the liberal-leaning Economic Policy Institute that explored the impact of defined contributions plans – which were never meant to replace Social Security or defined benefit pension plans – on retirement savings.
“Much of the 401(k) era coincided with a long bull market propping up household wealth measures even as traditional pensions became scarcer and the savings rate declined,” EPI noted. “This house of cards collapsed in (a downturn in) 2001, and then again at the end of 2008” at the start of the Great Recession.
Disparity by age. Successive generations should be saving more in retirement accounts due to their higher average incomes. But while the retirement savings of middle-aged and older households have generally grown, those of younger households have stayed flat or declined in recent years. GenX’ers have saved roughly the same as baby boomers did at the same ages, and savings of the youngest boomers are also languishing. For prime-age workers (age 26–61) — both full- and part-time — participation declined from 52 percent in 2000 to 45 percent in 2010.