Who Participated in Retirement Plans in 2020 (pdf)

Who Participates in Retirement Plans, 2020 Key Findings »Most workers who are likely to have the ability to save for retirement and to be focused primarily on savingfor retirement do participate in an employer-sponsored retirement plan.Of those most likely to save for »Younger and lower-income households are more likely to report that they save primarily for reasonsother than retirement—for example, a home purchase, family, or education.Economic analysis suggeststhat these preferences are rational. Older and higher-earning workers are generally more likely to save »Retirement plan participation increases with age and income; consistent with their stated reasons forsaving, younger and lower-income workers are less likely to participate.Among all workers aged 26 to 64in 2020, 67% participated in a retirement plan either directly or through a spouse. That number ranged, »Tabulations of administrative tax data offer an alternative source for retirement plan participation statistics.The need for a more reliable measure of retirement plan participation has increased given changes tothe Annual Social and Economic Supplement (ASEC) to the Current Population Survey (CPS), the survey Table of Contents 1Introduction4Which Workers Would Be Expected To Participate in a Retirement Plan?9A Review of Data on Participation in Retirement Plans22Conclusion23Appendix Peter J. Brady, ICI senior economic adviser; and Steven Bass, ICI assistant director, retirement research, prepared this report. Suggested citation: Brady, Peter J., and Steven Bass. 2026. “Who Participates in Retirement Plans, 2020.”ICI ResearchPerspective32,no. 4 (May). Available atwww.ici.org/files/2026/per32-04.pdf.For all of the figures in this report, components may not add to the totals presented because of rounding. Introduction A primary focus of retirement policy has been increasing the share of workers who participate in retirementplans. As the retirement industry and policymakers try to increase participation, it is important to understandwhich workers currently participate in employer-sponsored retirement plans, why certain employers offer This report uses tabulations of administrative tax data published by the Internal Revenue Service (IRS) Statisticsof Income Division (SOI) to analyze participation in employer-sponsored retirement plans.1The SOI tabulationsreport various statistics for taxpayers who are wage and salary workers, inclusive of both private-sector workersand government workers. Among those statistics is the share of workers who are active participants in a These data offer an alternative to the traditional measures of retirement plan participation derived fromhousehold surveys. Research analyzing survey data matched with survey respondents’ tax data (Dushi and Iams2010; Dushi, Iams, and Lichtenstein 2011) finds that household surveys understate retirement plan participation.Furthermore, changes to the Annual Social and Economic Supplement (ASEC) to the Current Population Survey(CPS)—the source of the most commonly cited statistics on employer plans—appear to have made matters The SOI tabulations show that the share of workers participating in retirement plans increases with both age andincome. Overall, among all working taxpayers aged 26 to 64 in 2020, 67% were active participants in a retirementplan (DB, DC, or both) or had a spouse who was an active participant. However, the share was higher for older The overall participation rate understates the importance to retirees of the resources generated byemployer-sponsored retirement plans because it only provides a snapshot of participation at a single pointin time. Many of the younger and lower-income workers who do not participate in a retirement plan today willparticipate later in their working career, as younger workers do not remain young and many lower-income IRS Statistics of Income Division Form W-2 Tabulations The SOI tabulations used in this analysis are derived from a representative sample of individual income taxreturns.* In the 2020 tax year, 164.4 million tax returns were filed by 219.6 million individuals who were eithera primary or secondary taxpayer on those returns.†For the Form W-2 tabulations, the SOI examined the146.2 million primary and secondary taxpayers with wages, tips, or other compensation reported on FormW-2—the annual wage and tax statement provided to employees and filed with both the IRS and the Social Form W-2 identifies individuals who were active participants in employer-sponsored retirement plans. To bean active participant, a worker must have had contributions made on his or her behalf to a DC plan (eitheremployer or employee contributions) or have been eligible to participate in a DB plan. Active participantsinclude all individuals with a W-2 who had the retirement plan indicator marked in box 13 or who had This paper focuses on the 112.0 million working taxpayers aged 26 to 64, who represent the bulk (77%) ofworkers. It excludes 24.