According to the Bureau of Labor Statistics, only about 55% of the American workforce has access to a 401(k) and only about 38% of the total workforce participate. Doing some low level math, that means roughly 31% of those who have access to a 401(k) are not participating. What are people doing with their money? FOMOing?
At a 38% total workforce 401(k) participation rate, no wonder why everybody is worried about retirement. With 31% of workers with access to a 401(k) not participating, this looks a whole lot like self-inflicted pain, which is one reason why the wealth gap continues to increase. Even though I recently wrote about the average 401(k) balance finally breaching $100,000, we’ve still got a long way to go.
The reason why I’ve been such an avid 401(k) contributor my entire career is because I knew I didn’t want to get in at 5:30am in the morning and leave after 7:30pm for the rest of my life. The only way to extricate myself from a tiring life was to save and save some more. Besides, once your 401(k) is set up, saving becomes easy due to automatic deductions.
Now that I’m out of the work force, I think it’s a duty to expound upon the reasons why everybody with access to a tax-advantaged retirement plan should contribute. Once we get the participation rate up, then we can work on increasing the savings amounts. Let’s begin.