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USA Today
22-05-2025
- Business
- USA Today
Work till you drop? Here's why America's average retirement age keeps rising.
Work till you drop? Here's why America's average retirement age keeps rising. Show Caption Hide Caption Retirement group works to curb loneliness Combating loneliness and depression in their golden years, a Wisconsin senior citizen group is looking to add more members. Fox - Milwaukee The average retirement age of American workers is creeping steadily up, according to a new report from a prominent economist. And that trend invites a question: When will America's retirement age stop rising? Over the past three decades, the average retirement age has risen by about three years, economist Alicia Munnell reports in an April research brief. The typical retirement age in 2024 was 64 for men, 62 for women. The upward trend is slow, but striking. In 1994, the average man worked to age 61, while the typical woman clocked out at 59. Americans are living longer, and working longer We're working longer for several reasons: Americans are living longer, staying healthier, and working in less physically demanding jobs. Workplace pensions have given way to 401(k) plans, which reward workers who delay retirement. Social Security changes have pushed the 'full retirement' age from 65 to 67, penalizing those who claim the benefit earlier. Fewer employers offer health insurance to workers who retire before 65, the year Medicare benefits begin. 'There were a lot of forces that encouraged people to work longer,' said Munnell, senior adviser at the Center for Retirement Research at Boston College, an organization she founded. Are Americans working longer because they have to? Does the trend toward later retirement bode well or ill for American society? Among retirement researchers, opinion is divided. If Americans were working longer to stave off poverty, then a rising retirement age would be a bad thing, said Andrew Biggs, a senior fellow at the American Enterprise Institute. But he doesn't see that happening, at least not for most Americans. 'They're getting higher Social Security benefits, and the benefits they're getting from private retirement plans have increased,' he said. 'So, they don't need to work to stay out of poverty.' Whether American retirees have enough savings and benefits to live comfortably in retirement is, however, a matter of spirited debate. In a viral 2024 op-ed, Biggs made the case that most retirees are managing just fine, even with relatively modest savings. On the other hand, a 2024 AARP survey found that one-fifth of over-50 adults have no retirement savings, and that many worry they won't have enough funds to last through retirement. 'So, for a meaningful share of workers, postponing retirement is likely a necessity to keep their main income stream going,' said Nicola Bianchi, assistant professor of strategy at Northwestern University's Kellogg School of Management. Workers have a love-hate relationship with retirement American workers have decidedly mixed emotions about retirement. Millions of Americans dream of retiring early. As we age, dreams give way to reality, and many workers resolve to remain employed for as long as they can. The average over-50 worker expects to retire at 67, according to the Transamerica Center for Retirement Studies. 'Today's workers envision extending their working lives beyond traditional retirement age because they want and need to work,' said Catherine Collinson, CEO of the Transamerica Center. In the end, though, many of us retire earlier than we had planned, often because of corporate downsizing or declining health. Munnell's research sought to divine whether average retirement ages will rise further in years to come: One day, will most Americans work to age 70? Probably not. Munnell concluded that the upward trend has likely peaked. 'There are all these forces that pushed up the average retirement age, beginning in the mid-'90s,' she said. 'And the thing that struck me is that every one of them seems to have played itself out.' The gradual uptick in Social Security's full retirement age is done, with no more changes planned. The shift from pensions to the 401(k) is complete, and half of American workers now participate in the plans. Meanwhile, the trend toward longer and healthier lives has slowed. Two ages loom large in the retirement decision In the calculus of American retirement, two specific ages loom large. One is 62, the year most Americans become eligible for Social Security. The other is 65, the year Medicare kicks in. It's no surprise that the average retirement age for men and women falls between those years, said Craig Copeland, director of wealth benefits research at the Employee Benefit Research Institute, or EBRI. 'I think those two years are going to be key,' he said. 'Unless those are moved, I don't see that the average retirement age is going to move much.' The share of Americans who claim Social Security at 62 has dropped dramatically in recent decades. Based on expected longevity, most of us are better off financially if we wait until 70 to claim the benefit. Even so, 62 remains the most popular age for Americans to claim Social Security. Will the retirement age go down in 2025? Munnell predicts the average retirement age may actually decline in 2025, for a reason that she might not have predicted in 2024. The Trump administration's cost-cutting campaign across federal government has triggered a torrent of new Social Security claims this year. New claims were up by more than 15% in March, compared with the same month in 2024. Munnell and others ascribe the surge to widespread fears about the stability of the retirement trust fund, amid staff cuts, rule changes, website outages and leadership shuffles. 'They're all racing in to claim benefits, which means they're likely to stop working earlier than they had planned,' she said. Future policy changes could determine whether America's retirement age continues to rise. Republicans in Congress have periodically proposed raising the full retirement age for Social Security, although President Trump has pledged not to touch it. If the age of eligibility for full Social Security benefits rose from 67 to, say, 70, America's average retirement age would probably resume its upward drift, Munnell said. If Congress were to raise the age of eligibility for Medicare, retirement ages could rise even more dramatically. But retirement experts say it's hard to imagine that scenario, given the high costs of health insurance. 'I don't see that happening,' said Copeland of EBRI.
Yahoo
05-05-2025
- Business
- Yahoo
What If You Had a Plan To Retire Comfortably by Age 60?
For many Americans, retirement can be daunting. Not only do you face a major lifestyle change, but the financial aspect can be hard to manage. In fact, 55% of Americans worry they will not have financial security in retirement, according to a National Institute of Retirement Security survey. But what if you could put together a plan so that you not only can retire comfortably, but you can even do so a few years at age 60, before most people retire? Read Next: Try This: Studies vary, but one from the Center for Retirement Research at Boston College finds men retire on average at age 64.6, while women do so at age 62.6. Social Security also can not be claimed until 62 at the earliest and full retirement benefits don't start until age 67 for those born in 1960 or later. Consider the below main areas if you want to set yourself up for a slightly early retirement that can enable you to live comfortably. According to a Chinese proverb, the best time to plant a tree was 20 years ago and the second best time is now. The same idea applies if you're planning to retire at age 60, in the sense that starting from a young age is ideally best, but since you can't go back in time, the next best thing is to start planning right away. 'When it comes to planning for the future and retirement the short answer is the sooner, the better. The earlier you begin saving and investing, the more time your money has to grow and the less you need to save to hit your goals. When you have time and compound interest on your side it can be very powerful,' said Amber Schiffert, co-founder of Tara Wealth. Check Out: That said, sometimes saving more later in life is more realistic, particularly as you advance in your career and earn more. Many people's greatest financial achievements don't occur in their 20s and 30s. 'So there is hope if you are in your 40s or even early 50s. Just realize the later you wait you are going to need a higher savings rate and/or look at decreasing your spending,' said Chad Gammon, certified financial planner (CFP) and owner at Custom Fit Financial. Another key aspect to retiring comfortably at age 60 is figuring out how much you realistically need to cover your monthly spending so that you can save and invest accordingly. It's one thing to start early, but if you're not moving toward a particular goal, then you might not end up where you want to be. 'For example, if you want to retire in San Diego — where I'm located and many of our clients are — and you want to live a comfortable lifestyle you might need $120,000 a year, after taxes or $10,000 per month,' Schiffert said. From there, you can do some calculations, starting with estimating your Social Security income. If you assume you'll receive $4,000 per month from Social Security, that means you would need a retirement savings balance of $1.8 million to be able to stick to the relatively safe 4% withdrawal rule and take out $6,000 per month, Schiffert explained. Granted, this does not account for taxes, so you'll likely need more, but will have to calculate that based on factors such as where you live and if you have a Roth or traditional retirement account. Then, you can calculate what it would take to save $1.8 million (or whatever number applies to your situation) by using a compound interest or similar retirement calculator to determine how much you need to invest per month based on your age and expected average annual return. For example, if you're 30, you would roughly need to save almost $1,900 per month to reach $1.8 million by age 60 if earning a 6% annual return, but if you're 20, you could save less than $1,000 per month and still hit that mark, as Schiffert pointed out. This shows the power of starting early. If you're closer to age 60, you might not have the benefit of much time for compounding, so instead you might try to save tens of thousands of dollars per year if you have that luxury. That could mean saving and investing across both retirement and non-retirement accounts, while cutting back in other areas of spending, so you can reach your goal. 'To retire at 60, many of the clients I see have maximized contributions to their retirement accounts and start saving in their brokerage accounts. They also typically know their spending very well and can control costs outside of their fixed costs,' Gammon said. Lastly, retiring at age 60 means you're retiring before you can claim Social Security and Medicare benefits. So, you'll likely want to figure out ahead of time how you'll navigate the gap. 'The retirees at age 60 are typically not looking to take Social Security at the earliest age of 62. They are waiting at least until their full retirement age and many are delaying to the maximum age of 70' so they can ultimately claim higher benefit amounts, Gammon said. 'The main area they need help around is with health care coverage until they get to age 65.' That comes back to knowing your numbers. While it's hard to say for sure how much you'll spend on healthcare, you could consider averages, such as Bureau of Labor Statistics data showing the average person ages 55 to 64 spends around $6,700 per year on healthcare. So, factoring that into your spending can help you save enough to retire comfortably at age 60. More From GOBankingRates 5 Types of Vehicles Retirees Should Stay Away From Buying How Far $750K Plus Social Security Goes in Retirement in Every US Region 4 Things You Should Do if You Want To Retire Early 12 SUVs With the Most Reliable Engines Sources National Institute of Retirement Security, 'Retirement Insecurity 2024: Americans' Views of Retirement' Center for Retirement Research at Boston College, 'Will the Average Retirement Age Keep Rising?' Amber Schiffert, Tara Wealth. Chad Gammon, Custom Fit Financial. Bureau of Labor Statistics data, 'Consumer Expenditure Surveys.' This article originally appeared on What If You Had a Plan To Retire Comfortably by Age 60?
Business Insider
26-04-2025
- Business
- Business Insider
Older Americans who need to unretire are starting businesses, earning $15 an hour, or struggling to find anything at all
Sharon Tagle thought her finances were in order when she retired seven years ago. However, she recently returned to work. In December, the 68-year-old got a job at Home Depot as a cashier working 20 hours a week. She said her concerns about inflation and a failed home sale influenced her decision. She earns $15 hourly and expects to work for the next few months, longer if her financial conditions remain tight. "I'm sorry that I left my job as soon as I did, but things were getting to me, and I just didn't want to work anymore," Tagle, who lives in Tampa, Florida, said. "I was not as frugal as I could have been. We're still having a good time, just not having it as much." She retired from her role as a personal injury claims adjuster from an insurance company with about $250,000 in savings. She and her husband receive about $3,400 monthly in combined Social Security. The couple hoped to sell their home in Florida two years ago and move to a state with a lower cost of living, but they couldn't secure a buyer. Tagle is one of dozens of older Americans who told Business Insider recently that they're either holding on to their jobs or unretiring because of economic uncertainty and pessimism about their financial futures. Those who are unretiring said they're nervous about the fate of Social Security, Medicaid, and other government benefits amid federal budget cuts. Others fear how their retirement savings and investments will fare as tariff policies continue to roil the stock market. This story is part of a series on older workers. To be sure, returning to work is often out of the question for many older Americans. Geoffrey Sanzenbacher, a research fellow at the Center for Retirement Research at Boston College, said many older Americans couldn't return to work or had limited options because they worked physical jobs that they're no longer capable of doing. These workers often lacked employer-based retirement systems like 401(k)s, which hurt their retirement plans. Earlier in April, House Republicans voted to pass a GOP budget plan that included $880 billion in cuts for the House Energy and Commerce Committee over the next decade, whose main programs are Medicaid and Medicare. As part of reconciliation, GOP lawmakers are set to add details to the proposal, such as whether federal Medicaid funding would be reduced and by how much. Trump has said that he will not cut Social Security benefits or touch Medicare. But the Social Security Administration has outlined plans to cut as many as 7,000 employees, which could increase wait times for recipients seeking assistance. Former SSA Commissioner Martin O'Malley, along with staff inside the agency, told BI that disruptions could lead to interrupted benefits. While investors and economists have grown more concerned about a recession this year, they remain divided on whether it will happen. That hasn't eased some older Americans' fears, prompting some to reenter the workforce. But for many older Americans, finding the perfect job may be out of the question. Amanda Clayman, a financial therapist, said many older job seekers have to deal with rejections from employers due to factors including ageism. She said people should be open to a wide variety of jobs, as any boost to their finances could be worthwhile. "The goal may no longer be finding the right job or what the right job might be," Clayman said, adding older Americans should consider taking temporary or part-time positions even if they're not desirable. Some are unretiring to start businesses Diann Witherspoon, 72, said recent financial insecurities had pushed her to prepare to restart her fiber art and quilting business. Witherspoon, who lives in Ohio, said she's always lived paycheck to paycheck, raising two special needs children and "working myself to death" to provide for them. She held accounting and property management jobs while sewing on the side. After back and knee surgeries, Witherspoon said there weren't many jobs she could do now. She was laid off in 2017 the day she returned to her office after surgery, and her husband died of lung cancer a few years later. She shuttered her quilting company in December 2022 after a period of grief and had more back surgeries a year later. She lives off half her husband's retirement income, which is $467 monthly, and $2,137 in monthly Social Security. It's enough to cover her $1,700 monthly house payment but not enough to have much left after other expenses. Her son, who lives with her, helps pay the bills. Witherspoon said she's working to make new patterns to sell online and start teaching. She hopes to sell a few pieces a month and earn between $2,000 and $5,000, but she doesn't want to scale so large that she'll need employees. "I just want to be able to sustain it myself so that we can survive, and I'd like to get something going so it just keeps producing income," Witherspoon said. "For the first time in 72 years living in this country, I am afraid." Some retirees are struggling to find work Moira MacLean, 69, retired as a social assistance case manager 2 ½ years ago, though she knew she would have to return to work at some point. The former lawyer, who lives in a community for older folks, left her position when she feared her company wouldn't let her work part time because she was fatigued. MacLean, who lives in Washington, was getting by with savings and her $2,280 monthly Social Security payments, but with her money dwindling, she put herself back on the job market over the past few months in search of a similar role. She hasn't had luck yet, and she feels her age and time away from the office haven't helped her applications. She also tried starting a third-party seller business for household products on Amazon, which put her into debt as the business didn't take off. "There is zero room for investing anything differently than I already have," MacLean said of her long-term planning. "I live too close to the edge to do anything about that." Pam Hovland, 70, is also struggling to find work and fears a recession would make it even more difficult. "It scares me to death," Hovland said of the prospect of an economic downturn. "So I'd like to try to get a job before it all takes effect." Hovland, who also lives in Washington, worked as a medical transcriber until around 2005 when a health issue put her in a coma for three months and forced her into retirement. She relied on disability income until around 2020, when her benefits converted to Social Security income — she said she gets a check for $1,099 monthly. But by 2022, Hovland began struggling to pay the bills and, at times, afford birthday cards for her grandchildren. While she was able to reduce her rent through a Department of Housing and Urban Development program, she's still searching for customer service or fast food roles.
USA Today
20-04-2025
- Business
- USA Today
401(k) retirement saving hits a milestone. Has it finally caught on?
Half of all workers in private-sector America now participate in 401(k) plans, a sign that tax-advantaged retirement savings may be catching on at last. As recently as 2010, federal data shows, barely two-fifth of workers in private industry held 401(k)-type accounts. Between that year and 2024, however, the participation rate tiptoed up to 50%. Over the past half century, the federal government has been trying to persuade Americans to build savings to cover their retirement, and to supplement Social Security, using tax breaks as a lure. With participation reaching 50%, it would seem that effort is half successful. To optimistic observers, the 401(k) has nowhere to go but up. 'I think what these stats are showing is steady improvement year over year,' said David Stinnett, head of strategic retirement consulting at Vanguard. 'I think it will keep increasing. I think employers understand that this is a retirement benefit that employees care a lot about.' Need a break? Play the USA TODAY Daily Crossword Puzzle. Other retirement experts note the frustrating flipside: Half of private-sector workers still do not participate in 401(k)s. 'There's two ways to look at it. Is the glass half full, or is the glass half empty?' said Anqi Chen, associate director of household finance and savings at the Center for Retirement Research at Boston College. 'Fifty percent of American workers not having a retirement plan is not fantastic.' 401(k) participation is rising along with access The simplest reason why more private-sector Americans are participating in 401(k) plans is that more employers are offering them. Between 2014 and 2024, employee access to 401(k)-style plans marched up from 60% to 70%, according to the Bureau of Labor Statistics. Access to tax-favored retirement plans is widening as more states introduce 'automated savings' programs, prodding companies to offer retirement plans and enrolling workers automatically. Collectively, those initiatives have helped employees amass nearly $2 billion in retirement savings. Starting in 2025, most new 401(k) plans must automatically enroll workers, rather than leave the decision to them. 'We used to spend a lot of time designing education programs to try to entice people to participate in the plan,' said Stinnett, a longtime 401(k) advocate. 'Now, people are being defaulted into the plan.' The COVID-19 pandemic, too, boosted 401(k) participation: In a tight labor market, companies offered retirement savings as an incentive to applicants. Has 401(k) savings reached critical mass? The 401(k) and its personal savings counterpart, the Individual Retirement Account, emerged in the 1970s as tools for Americans to build retirement savings. The plans have gradually replaced traditional pensions, which deliver monthly benefits to retired workers. With half of the nation's private-sector workers now participating in 'defined contribution' retirement savings, some observers sense the long federal campaign has reached a tipping point. 'I think what's happened is, we've gotten smarter about 401(k)s,' said Chris Littlefield, president of retirement and income solutions at Principal Financial Group, the nation's third-largest 401(k) administrator. Littlefield points to the trend toward automatically enrolling workers in retirement savings, a step that dramatically boosts participation. 'It's not that we're without challenges,' he said, 'but we're closing the gap on the challenges.' That view is not universal. In a 2024 paper, two economists from opposing ideological camps made the provocative case that the federal government should abolish the tax-sheltered retirement programs, branding them a failure. 401(k)s favor wealthy Americans Federal data suggests 401(k)s and IRAs mostly help well-heeled Americans. For households in the top 10% by income, the median retirement account held $559,000 in 2022, according to the federal Survey of Consumer Finances. An overwhelming 93% of those households held retirement accounts. For middle-income Americans, those in the 40th to 60th percentile by income, the median retirement account held just $39,000. Nearly half of that group had no retirement account. The goal of the tax subsidies was to encourage more Americans to save for retirement. But the paper notes that participation in employer-sponsored retirement plans seems to have stalled around 50%. 'There's a group of people that always have retirement plan coverage,' Chen said. "And then you have this group that very rarely or never have retirement plan coverage.' Access is key to participation. Data from Vanguard shows that average participation in 401(k)-type plans rose from 79% in 2014 to 85% in 2023. When companies automatically enroll workers in retirement saving, participation rises past 90%. Retirement saving is 'one of the few very bipartisan areas' of federal policy, Stinnett said. Congress passed a series of retirement savings initiatives in 2022 as part of SECURE Act 2.0, with support from retirement plan administrators. Among them: The Saver's Match Under the Saver's Match, starting in 2027, nearly 22 million low- and middle-income employees who contribute to a retirement savings account become eligible for matching funds from the government. The maximum match is $1,000 per person, according to a Pew analysis. The Saver's Match replaces the current Saver's Credit, a nonrefundable tax credit for lower-income taxpayers. The big difference: The Saver's Credit only reduces the tax you owe. The Saver's Match puts dollars into your retirement account. Auto-portability This initiative encourages workers to 'roll over' retirement savings into an IRA if they leave a job, whereupon the money can automatically transfer to a retirement plan at a new employer. The auto-portability program applies to accounts valued at $7,000 or lower. Research shows workers often cash out low-value accounts, potentially losing thousands of dollars in compounded interest over time. In 2022, a consortium of private retirement-plan providers announced a collaboration to boost the portability of small retirement accounts. Auto-enrollment Starting in 2025, most new 401(k) plans must automatically enroll employees, rather than leave the decision to workers. Many older 401(k) plans are voluntary, meaning that employees must sign up to participate. Under auto-enrollment, an employee who does nothing opts in. Auto-enrollment is a powerful tool for saving. Vanguard found that workers with auto-enrollment plans participated at a rate of 94% in 2023, compared with 67% enrollment in voluntary plans. Long-term part-time workers As of 2025, part-time employees who work at least 500 hours in two consecutive years are entitled to participate in workplace 401(k) plans. Part-time workers have struggled to gain access to retirement savings.
Yahoo
19-04-2025
- Business
- Yahoo
401(k) retirement saving hits a milestone. Has it finally caught on?
Half of all workers in private-sector America now participate in 401(k) plans, a sign that tax-advantaged retirement savings may be catching on at last. As recently as 2010, federal data shows, barely two-fifth of workers in private industry held 401(k)-type accounts. Between that year and 2024, however, the participation rate tiptoed up to 50%. Over the past half century, the federal government has been trying to persuade Americans to build savings to cover their retirement, and to supplement Social Security, using tax breaks as a lure. With participation reaching 50%, it would seem that effort is half successful. To optimistic observers, the 401(k) has nowhere to go but up. 'I think what these stats are showing is steady improvement year over year,' said David Stinnett, head of strategic retirement consulting at Vanguard. 'I think it will keep increasing. I think employers understand that this is a retirement benefit that employees care a lot about.' Other retirement experts note the frustrating flipside: Half of private-sector workers still do not participate in 401(k)s. 'There's two ways to look at it. Is the glass half full, or is the glass half empty?' said Anqi Chen, associate director of household finance and savings at the Center for Retirement Research at Boston College. 'Fifty percent of American workers not having a retirement plan is not fantastic.' The simplest reason why more private-sector Americans are participating in 401(k) plans is that more employers are offering them. Between 2014 and 2024, employee access to 401(k)-style plans marched up from 60% to 70%, according to the Bureau of Labor Statistics. Access to tax-favored retirement plans is widening as more states introduce 'automated savings' programs, prodding companies to offer retirement plans and enrolling workers automatically. Collectively, those initiatives have helped employees amass nearly $2 billion in retirement savings. Starting in 2025, most new 401(k) plans must automatically enroll workers, rather than leave the decision to them. 'We used to spend a lot of time designing education programs to try to entice people to participate in the plan,' said Stinnett, a longtime 401(k) advocate. 'Now, people are being defaulted into the plan.' The COVID-19 pandemic, too, boosted 401(k) participation: In a tight labor market, companies offered retirement savings as an incentive to applicants. The 401(k) and its personal savings counterpart, the Individual Retirement Account, emerged in the 1970s as tools for Americans to build retirement savings. The plans have gradually replaced traditional pensions, which deliver monthly benefits to retired workers. With half of the nation's private-sector workers now participating in 'defined contribution' retirement savings, some observers sense the long federal campaign has reached a tipping point. 'I think what's happened is, we've gotten smarter about 401(k)s,' said Chris Littlefield, president of retirement and income solutions at Principal Financial Group, the nation's third-largest 401(k) administrator. Littlefield points to the trend toward automatically enrolling workers in retirement savings, a step that dramatically boosts participation. 'It's not that we're without challenges,' he said, 'but we're closing the gap on the challenges.' That view is not universal. In a 2024 paper, two economists from opposing ideological camps made the provocative case that the federal government should abolish the tax-sheltered retirement programs, branding them a failure. Federal data suggests 401(k)s and IRAs mostly help well-heeled Americans. For households in the top 10% by income, the median retirement account held $559,000 in 2022, according to the federal Survey of Consumer Finances. An overwhelming 93% of those households held retirement accounts. For middle-income Americans, those in the 40th to 60th percentile by income, the median retirement account held just $39,000. Nearly half of that group had no retirement account. The goal of the tax subsidies was to encourage more Americans to save for retirement. But the paper notes that participation in employer-sponsored retirement plans seems to have stalled around 50%. 'There's a group of people that always have retirement plan coverage,' Chen said. "And then you have this group that very rarely or never have retirement plan coverage.' Access is key to participation. Data from Vanguard shows that average participation in 401(k)-type plans rose from 79% in 2014 to 85% in 2023. When companies automatically enroll workers in retirement saving, participation rises past 90%. Retirement saving is 'one of the few very bipartisan areas' of federal policy, Stinnett said. Congress passed a series of retirement savings initiatives in 2022 as part of SECURE Act 2.0, with support from retirement plan administrators. Among them: Under the Saver's Match, starting in 2027, nearly 22 million low- and middle-income employees who contribute to a retirement savings account become eligible for matching funds from the government. The maximum match is $1,000 per person, according to a Pew analysis. The Saver's Match replaces the current Saver's Credit, a nonrefundable tax credit for lower-income taxpayers. The big difference: The Saver's Credit only reduces the tax you owe. The Saver's Match puts dollars into your retirement account. This initiative encourages workers to 'roll over' retirement savings into an IRA if they leave a job, whereupon the money can automatically transfer to a retirement plan at a new employer. The auto-portability program applies to accounts valued at $7,000 or lower. Research shows workers often cash out low-value accounts, potentially losing thousands of dollars in compounded interest over time. In 2022, a consortium of private retirement-plan providers announced a collaboration to boost the portability of small retirement accounts. Starting in 2025, most new 401(k) plans must automatically enroll employees, rather than leave the decision to workers. Many older 401(k) plans are voluntary, meaning that employees must sign up to participate. Under auto-enrollment, an employee who does nothing opts in. Auto-enrollment is a powerful tool for saving. Vanguard found that workers with auto-enrollment plans participated at a rate of 94% in 2023, compared with 67% enrollment in voluntary plans. As of 2025, part-time employees who work at least 500 hours in two consecutive years are entitled to participate in workplace 401(k) plans. Part-time workers have struggled to gain access to retirement savings. This article originally appeared on USA TODAY: Has 401(k) retirement savings finally caught on? Sign in to access your portfolio
