America's Retirement Plans: A Global Benchmark

America's voluntary retirement plans are often hailed as a global benchmark, with other countries seeking to emulate the success of 401(k) plans and individual retirement accounts (IRAs). These retirement vehicles have played a big role in helping Americans from every background and income level secure their own financial future and build a strong foundation for their families.

Despite its success, there's been a growing trend of skepticism and criticism aimed at the very architecture of the US voluntary retirement system. But how do those criticisms stand up to the facts? 

Take high rates of plan participation, for example. According to economists’ analysis, more than 70 percent of retirees receive income from employer-sponsored plans—such as 401(k)s—or IRAs, either directly or through a spouse. Additionally, economists found that, adjusted for inflation, the typical American retiree maintains more than 90 percent of their average age 55–59 spendable income, thanks to distributions from retirement plans and Social Security. 

Much of this success has been made possible by investments in regulated funds. In 2022, a remarkable 54.7% of US households owned shares of mutual funds, ETFs, or other types of funds, encompassing a staggering 71.7 million households and 120.5 million investors. Thanks in large part to these funds, retirement assets per household are over seven times greater than they were in 1975, adjusted for inflation. 

Voluntary retirement plans have also evolved significantly over time. As of plan-year 2020, 91 percent of 401(k) participants were in plans with employer contributions, which offer an immediate return on a participant’s investment. Altogether, these statistics prove the key role that voluntary retirement plans play in the financial lives of millions of Americans.

Policymakers should focus on collaborative efforts with the financial services industry to strengthen the foundations of our successful system, always keeping the well-being of the people it serves at the forefront. Together, let's champion policies that safeguard your investments and pave the way for a future marked by financial confidence and prosperity.

Join the Secure Financial Future action network today!