Middle and lower income Americans are falling behind their wealthier countrymen in terms of retirement savings, according to a new report. Dayforce’s “The Retirement Guide,” says that overall participation rates in 2024 were 78.7% for full-time workers. This is a 0.7% drop overall since 2021. For women, it a 1%drop and men’s participation rates have remained flat in the same time period.
“We believe that this research should serve as both a wake-up call and a call to action,” according to Jason Rahlan, Global Head of Sustainability and Impact with Dayforce. “The evidence is clear that not everyone is benefiting equally from recent gains in addressing our nation’s retirement insecurity crisis. Our hope is that employers, plan providers, and policymakers consider this data in their ongoing efforts to give all Americans the opportunity to retire securely and with dignity.”
The report also shows that since 2022, retirement plan participation, total contributions, and savings rates have decreased for full-time workers earning under $150,000. However, workers earning more than $150,000 saw gains across all three measures. The average savings rate for the entire full-time workforce sits only at 9.3%, well below the recommended 12%–15% range.
Total contributions (i.e., employee and employer contributions) to workers’ retirement accounts increased by 13% to $9,488. This includes annual employee contributions increasing by 11% to $5,988, and employer contributions rising by 17% to $3,500. In addition, the overall savings rate for full-time employees increased by 0.5 percentage points to 9.3% — with the employee savings rate rising by 0.2 percentage points to 5.9%, and the employer savings rate increasing by 0.3 percentage points to 3.4%.
Also, in 2024, there were significant gaps in employer and individual retirement plan participation rates, annual contributions, savings rates, and loan use for Black and Latino workers. For example, 84.6% of white workers participated in a retirement plan compared to just 61.1% of Latinos and 68.2% of Black workers. In addition, total annual contributions for white workers was $11,676, while it was $5,404 for Black workers and $5,389 for Latinos.
There was also a generational divide seen in retirement savings. For example, the participation rate for baby boomers was 78.7%, while it was 82% for Gen X, 80.2% for millennials, and just 68.7% for Gen Z. In addition, total annual contributions for baby boomers was $11,481, while it was $11,597 for Gen X, $9,005 for millennials, and only $4,958 for Gen Z. Notably, the overall retirement savings rate for baby boomers was 10.3%, while it was 9.8% for Gen X, 9.1% for millennials, and just 7.2% for Gen Z.
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