The Investment Company Institute issued a new study of retirement plan participation and concluded previous studies understate retirement plan participation. The new study looks at tax data. Previous work on the subject relied primarily on Census Bureau data. The new study pointed out flaws with the Census Bureau data, and that the Census Bureau changed its data collection method in 2014, which led to a decline in reported participation. The ICI concludes the retirement crisis that’s been widely-discussed doesn’t exist.
“More American workers are benefiting from employer plans than the conventional wisdom would suggest,” says ICI Senior Economist Peter J. Brady, who coauthored the paper with ICI Associate Economist Steven Bass. “This is for two reasons. First, the most widely cited statistics undercount retirement plan participation. Second, many only look at the headline statistic, which provides a snapshot of participation at a single point in time. But preparing for retirement is more like a movie than a snapshot, and what matters are the resources that accumulate throughout a career. Many of the younger and lower-income workers who are not participating today will do so later in their careers, and as a result, will reach retirement having accumulated employer plan resources.”