America is facing a demographic tipping point.
We’re seeing the largest surge of retirements in history, with more than 11,200 Americans turning 65 every day. Within a decade, the Census Bureau projects that there will be more Americans 65 years and older than 18 and under.
At the same time, the U.S. Congress has championed strong bipartisan legislation in recent years to close retirement savings gaps and ensure financial security for current and future retirees.
In 2019, Congress passed the SECURE Act. Three years later, it passed the SECURE 2.0 Act. These important pieces of legislation enhanced retirement savings opportunities for millions of Americans. These bipartisan bills were signed into law by Presidents Trump and Biden.
We expect the benefits of these laws to be fully felt over several years. But here is what we are seeing now on two ends of the retirement spectrum.
Since 2019, there has been a substantial increase in retirement plan participation for workers of all ages. The increase has been greatest for those in the earlier stages of their working lives.
Among households headed by a 25-to-39 year-old, there has been a 5.9 percentage-point increase in retirement plan participation, including annuity ownership.
We expect this trend to continue. This will have a huge impact on the financial security of Americans later in life.
On the other end, there are more households nearing retirement with an annuity – a powerful tool for retirees to supplement Social Security and provide more certainty through retirement.
While the data indicates that there has been progress, there is still more work underway to boost retirement savings for workers who need it most. For example, Representative Richie Neal (D-MA), recently introduced the Automatic IRA Act of 2024. This bill requires businesses with 10 or more employees that currently do not offer a retirement plan to provide one with automatic enrollment and a lifetime income distribution option.
If passed, this bill would significantly affect the workplace retirement plan access gap. ACLI estimates that more than 31 million additional American workers will gain access to workplace retirement plans and over 22 million will participate if the legislation is adopted.
Andrew Melnyk is Vice President, Research and Chief Economist at the American Council of Life Insurers (ACLI). He holds a doctorate in economics and is a Certified Business Economist. His functions at ACLI include authoring white papers; managing the production of statistical publications; and managing ACLI’s Research Department. Prior to joining ACLI in 2005, he held positions in academia, government, and the private sector, both in the U.S. and abroad.
