According to U.S. Census
Bureau data, baby boomers,
men, non-Hispanic
White, and Asian people are the
Americans most likely to own retirement
accounts. Even in core
American saturated areas like
Southwest Florida.
In order to shed more light
on how people were preparing
for retirement in 2020, new
questions were included to the
Survey of Income and Program
Participation (SIPP) for 2021.
It drew attention to variations
in retirement assets among generations,
sexes, races, and ethnicities
Similar estimates for 2013
from a previously published research
that used information
from the 2014 Social Security
Administration Supplement and
the 2014 SIPP were also updated
in this report.
In the past, the SIPP requested
people to declare whether
they had any retirement accounts,
which are divided into:
Employer-sponsored defined-
contribution plans that
offer tax advantages include
the 401(k), 403(b), 503(b), and
Thrift Savings Plans. Subject to
annual contribution caps, employees
determine how much to
contribute, and some employers
match employees’ contributions.
IRAs and Keogh accounts
are examples of defined-contribution
schemes that can offer
tax advantages for retirement
savings. Individuals determine
their contribution amounts, subject
to annual contribution caps.
Account values in the plans can
be used to generate income in
retirement.
Plans with defined benefits
and cash balances: These provide
retirees with monthly payouts.
Cash balance plans define
the benefit in terms of a specified
account balance, whereas
payments from a defined-benefit
plan sometimes depend on
an employee’s salary and length
of service.
The majority of working-age
baby boomers who owned at
least one form of retirement account
in 2020 (58.1%) were between
the ages of 56 and 64.
Next most likely to have retirement
funds were members of
Gen X between the ages of 40
and 55 (56.1%).
Only 7.7% of members of
Generation Z or Gen Z between
the ages of 15 and 23 had a retirement
account, compared to
around half (49.5%) of Millennials
between the ages of 24 and 39.
Although Generation Z had
the longest time to save for retirement,
they were the group
least likely to establish a retirement
account as of 2020. Only
17.7% of Millennials who were
between the ages of 15 and
31 in 2013 had retirement accounts,
according to earlier research
with SIPP statistics for
that year.
New inquiries regarding
employer and employee contributions
to retirement plans
supported by a person’s primary
employment were added to
the 2021 SIPP. Individuals were
questioned about whether they
contributed to each account
type and, if yes, how much.
The SIPP also asked owners
of 401(k)-style, IRA, and Keogh
accounts whether their employer
made contributions and, if so, how
much, although this article focuses
on employee contributions.
Contributions and investment
gains or losses determine
how much an individual will get
from their defined-contribution
plans (IRA or Keogh accounts
and 401(k)-style accounts)
when they retire.
Employees may make contributions
to pension plans but
defined-benefit plans ensure a
certain monthly income upon retirement
based on prior salaries
and length of service rather than
overall contributions and investment
performance.
Some people might own retirement
accounts without actively
contributing to them.
Take into account a person
who decides to start their own
business after quitting a position
with an employer-sponsored
401(k). Although they can no
longer make contributions, they
still have that 401(k). Others
might be unable to make contributions
to their retirement accounts
due to financial hardship.
Therefore, in order to comprehend
how people, save for
retirement, it is important to take
into consideration both who owns
retirement accounts as well as
who makes contributions and the
amount of those payments.
