&l;p&g;&l;img class=&q;dam-image shutterstock size-large wp-image-1026246214&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/1026246214/960×0.jpg?fit=scale&q; data-height=&q;640&q; data-width=&q;960&q;&g; Shutterstock
The figures are startling:&a;nbsp; despite the well-established importance of saving for retirement, one-third of American private-sector workers do not have access to any sort of retirement plan, according to &l;a href=&q;https://www.nirsonline.org/wp-content/uploads/2018/02/Millennials-Report-1.pdf&q; target=&q;_blank&q;&g;Bureau of Labor Statistics data&l;/a&g;.
Sliced and diced, this works out to 8% of union workers, and 36% of nonunion workers.
Broken out by earnings level, 58% of the bottom quartile, 34% of the 2nd quartile, 22% of the third quartile, and 12% of the top quartile have no retirement plan access.
51% of those at small businesses (fewer than 50 workers), and 11% of those at large businesses (500 workers or more) have no retirement plans available to them.
42% of those in the Pacific region and 30% of those in the Midwest have no retirement plans.
But these statistics are all with respect to plans that employers offer to their employees&l;strong&g;,&l;/strong&g; either traditional pensions or 401(k)s, that is, retirement savings through payroll deduction.
In reality, essentially &l;strong&g;100% of workers have access to an opportunity for tax-advantaged retirement savings&l;/strong&g;.
I&s;m talking about IRAs, of course.&a;nbsp; Yes, there&a;nbsp;is &l;a href=&q;http://money.cnn.com/retirement/guide/IRA_traditional.moneymag/index3.htm?iid=EL&q; target=&q;_blank&q;&g;one limit to participation&l;/a&g;:&a;nbsp; if you are married &l;em&g;and&l;/em&g; your spouse is covered by a workplace plan, &l;em&g;and&l;/em&g; you have a comparatively high household income; there&s;s a phase-out of eligibility for tax-deferral from &l;a href=&q;https://www.irs.gov/newsroom/irs-announces-2018-pension-plan-limitations-401k-contribution-limit-increases-to-18500-for-2018&q; target=&q;_blank&q;&g;$189,000 to $199,000, for traditional IRAs&l;/a&g;.&a;nbsp; If you choose a Roth IRA, there are income limits &l;a href=&q;https://www.betterment.com/resources/can-you-have-a-401k-and-an-ira/&q; target=&q;_blank&q;&g;regardless of whether you have a workplace plan or not,&l;/a&g; but a traditional IRA is accessible to high earners in any case.
It&s;s true, of course, that an IRA is not as convenient a means of saving as a 401(k).
In the first place, the maximum contribution for an IRA is substantially lower than for a 401(k) — &l;a href=&q;https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits&q; target=&q;_blank&q;&g;$5,500 ($6,500 if&a;nbsp;age 50+)&l;/a&g; vs. &l;a href=&q;https://www.irs.gov/newsroom/irs-announces-2018-pension-plan-limitations-401k-contribution-limit-increases-to-18500-for-2018&q; target=&q;_blank&q;&g;$18,500 ($24,500 if age 50+)&l;/a&g;.&a;nbsp; And beyond that, enrollment, especially auto-enrollment, is a much easier task when done at the workplace, without the need to seek out a financial advisor.&a;nbsp; Plus, only 401(k) — or 403(b) — participation offers the possibility of employer match money.&a;nbsp; Which means that it&s;s perfectly natural that that&s;s where our attention will turn.
But in all of the various discussions about workplace savings, and whether states or the federal government should implement auto-enrollment programs, it seems to me that the first step should be to make IRAs a more effective vehicle for savings.&a;nbsp; After all, why reinvent the wheel if it&s;s not necessary?
It should be a no-brainer for Congress to equalize the contribution limits to IRAs and 401(k)s.&a;nbsp; I don&s;t claim to know what&a;nbsp;the reasons may have been for the discrepancy in the first place.&a;nbsp; I can guess that some may justify the difference as a carrot for employers to offer 401(k) plans, but it it hardly seems fair to penalize so many workers who are limited in their savings as a result.
In addition,&a;nbsp;the automatic savings element of a 401(k) can be mimicked by using an&a;nbsp;automatic transfer from one&s;s bank account, or, even better, by splitting one&s;s paycheck direct deposit to send a portion directly to the IRA, where employers offer this option.
Yes, there remains the question of whether&a;nbsp;individual workers&a;nbsp;could really know enough to choose an IRA provider, and there are issues around whether financial advisors would give working-class investors the time of day, or would, in order to do so, steer them towards high-expense investments which give the advisor a commission.&a;nbsp; (Personal anecdote:&a;nbsp; my first mutual fund investment was based on a prospectus someone had given me at the age of 22, where I filled out a form with my bank routing number to start automatic bank transfers.)&a;nbsp; But consider that there are a number of community groups devoted to health advocacy, and more sprang up to advise individuals on how to use the healthcare exchanges.&a;nbsp; It seems to me that we are missing, in general, similar groups with the mission of advising individuals on financial health.&a;nbsp; Everyone likes to take about personal finance as a course for high school students, but it seems more important for community organizations to offer this for actual adults making decisions, perhaps in the format of a &q;financial wellness fair&q; at the library or even sponsored by churches as community-outreach events.
&l;!–nextpage–&g;That being said:&a;nbsp; isn&s;t a state or nationwide plan in which everyone is auto-enrolled a lot more efficient?&a;nbsp; Oregon has already initiated this with &l;a href=&q;https://www.oregonsaves.com/&q; target=&q;_blank&q;&g;OregonSaves&l;/a&g;, and California is in the process of implementing it.&a;nbsp; Wouldn&s;t the costs be lower due to a single management firm?&a;nbsp; Wouldn&s;t auto-enrollment cut the need for any sort of efforts at advice?
I&s;ll be honest — state/nationwide plans make me nervous.&a;nbsp; There&s;s a single investment firm chosen by the state (which might reduce fees, but also raises the prospect of pay-to-play corruption), and a limited number of funds (which may be fine, but limits choice, for example, if a participant wants to elect an &q;ethical&q; investing fund, or disagrees with the state-appointed fund manager&s;s decisions&a;nbsp;to favor or disfavor certain companies).&a;nbsp; These funds are still in there very early stages, with OregonSaves having been launched in 2017.&a;nbsp; It may be that these programs are ultimately hailed as a great success, but we may also see limitations to their effectiveness.&a;nbsp; And in any case, these plans are also limited by the low IRA cap and lack of financial wellness community outreach.
So, let&s;s get started!
What do you think?&a;nbsp; Share your comments at &l;a href=&q;https://janetheactuary.com/2018/04/11/forbes-post-nearly-100-of-workers-have-access-to-retirement-savings-accounts/&q; target=&q;_blank&q;&g;janetheactuary.com&l;/a&g;.&l;/p&g;