Input Stories

For the first time, half of all private-sector workers are saving in 401(k) plans (The Wall Street Journal, subscription).  
 
What’s going on: “Long after workplaces started using these retirement plans in place of traditional pensions, they are finally reaching a tipping point. Around 70% of private-sector employees in the U.S. now have access to a 401(k)-style retirement plan. A decade earlier, 60% had access and 43% contributed, according to the U.S. Labor Department.”  

• In recent years, policymakers have made efforts to expand access to the plans. More states now offer a retirement savings option, Congress has “given small businesses more generous incentives” to offer them and companies are automatically enrolling new hires in the plans.   

Looking ahead: “Growth in worker adoption is likely to accelerate due to a federal law that went into effect this year, requiring many new 401(k) plans to use automatic enrollment.”  

• The legislation’s aim “is to expand 401(k) participation, since data shows that once people are auto-enrolled in a 401(k) plan, few drop out.”  

However … While more people are enrolled and plan-associated fees are on the decline, “there’s work left to be done” to increase participation in 401(k)s, David Stinnett, head of strategic retirement consulting at Vanguard, told the Journal. 

• For example, about 40% of the working populace isn’t saving sufficiently to support their current lifestyle throughout retirement.  

Small businesses: While small businesses—which employ half the American workforce—haven’t historically offered retirement-savings options, “more are adding them in response to a competitive job market, new tax credits and laws in several states that require many employers to give workers a way to save.”  

• And lower-cost plan providers are catering to these businesses. “Since 2020, Principal Financial Group has added 401(k)s at 9,000 small companies offering plans for the first time, the fastest-growing segment of its defined contribution business, which includes 401(k)-style plans.”  
• Recent laws in multiple states require that private-sector employers without retirement plans help their workers enroll in state-run programs—and small businesses are complying. According to research, “companies in California, Connecticut, Oregon and Illinois, where programs are three or more years old, have adopted 401(k)s at a faster rate than the national average.” 

Part-time workers, too: Part-time employees are also getting in on the retirement saving, owing largely to a law that went into effect in 2024 and was expanded this year.  

• “Now, part-timers who have worked at least 500 hours in each of two consecutive years must be allowed to contribute to the plans.”  

What’s coming: By 2029, the number of 401(k) plans will likely be around 1.1 million, according to Cerulli Associates research analyst Elizabeth Chiffer. (For comparison, in 2023, there were about 763,000).  
 
Let the NAM help you: NAM Manufacturers Retirement & Savings Plan can take the work of retirement-plan administration off your plate—so you can focus on your business. Learn more about the savings plan designed specifically for manufacturing workers.