Among working-age individuals, the most common type of retirement accounts in 2020 were 401(k)-type defined contribution (DC) plans, but new Census Bureau data finds that overall rates mask substantial inequality among those who own retirement accounts.
Based on the 2021 Survey of Income and Program Participation (SIPP), the U.S. Census Bureau finds that, among working-age individuals (ages 15 to 64), DC-based plans included 34.6% of all retirement account ownership in 2020, followed by IRA and Keogh accounts (18.2%), and defined benefit and cash balance plans (13.5%). The median value of DC plan accounts was $30,000, while the median IRA or Keogh value was $30,820.
But in highlighting the differences in retirement assets and ownership by generations, sex, race and ethnicity, the survey finds that Baby Boomers, men and non-Hispanic white and Asian individuals are the most likely to own retirement accounts.
In 2020, working-age Baby Boomers ages 56 to 64 were the most likely to own at least one type of retirement account at 58.1%. The next most likely were members of Generation X (ages 40 to 55) at 56.1%. Roughly half (49.5%) of Millennials ages 24 to 39 owned at least one type of retirement account, but only 7.7% of Gen Z members (ages 15 to 23) owned a retirement account.
Given their age, it’s not surprising that Gen Z members were the least likely to own a retirement account as of 2020, but they also have the most time to accumulate additional retirement savings. In fact, previous SIPP estimates for 2013 showed that only 17.7% of Millennials owned retirement accounts when they were ages 15 to 31.
Fast forward to today and current SIPP estimates show how Millennials’ retirement account ownership grew as they aged and gained labor market experience. “Future SIPP estimates will show the evolution of retirement account ownership for Gen Z members as they age and accumulate labor market experience,” write Census Bureau statisticians Maria Hoffman and Mark Klee, and economist Briana Sullivan.
Beyond generations, differences really start to show up when looking at ownership by sex, race and ethnicity. Men were slightly more likely (47.8%) than women (43.5%) to own a retirement account in 2020. In addition, about 54% of non-Hispanic white individuals owned a retirement account, and 46.8% of Asian individuals owned a retirement account.
Yet, only about 37% of non-Hispanic black individuals and 36.1% of “other” non-Hispanic individuals (i.e., American Indian or Alaska Native, Native Hawaiian or Other Pacific Islander or multiracial) owned at least one retirement account. Ownership rates were lowest among Hispanic individuals at 28.3%.
Saving for Retirement
Meanwhile, the 2021 SIPP also featured new questions on employee and employer contributions to retirement accounts sponsored by an individual’s main employer. For each account type, individuals were asked about contributions they made, and income withdrawn or received from these accounts.
According to the findings, 92.1% of 401(k)-style account owners and 81.1% of IRA or Keogh account owners contributed to their retirement accounts in 2020; this was regardless of the frequency of their contributions. Meanwhile, a smaller share (57.7%) of pension holders contributed to their employer-sponsored DB or cash balance plan.
The median amount account holders contributed to their 401(k)-style accounts was $3,599, and for pension plans was $3,257. The median total amount employees contributed in 2020 to their own IRA or Keogh account was slightly lower at $2,514.
While this current update featured only employee contributions, the Census Bureau notes that future research will examine employer contributions in combination with employee contributions.
What Is the SIPP?
For those who may be unfamiliar with it, the SIPP is a nationally representative longitudinal survey administered by the U.S. Census Bureau that provides comprehensive information on the dynamics of income, employment, household composition and government program participation. Beginning with the 2021 interview, the SIPP asked a series of questions sponsored by the Social Security Administration (SSA) about employer-sponsored retirement and pension plan coverage. These questions are a revised version of questions included in the 2014 SSA Supplement and the Retirement and Pension Plan Coverage Topical Module administered as far back as the 1984 SIPP panel.
