Retirement Readiness
America Isn’t Saving Enough: The 401(k) Is Positioned to Do Something About It
Last Updated: April 08, 2025
In Case You Missed It—America Faces a Savings Challenge
It’s no secret that too few American workers are saving enough to be on track for retirement. Across the country, employees are falling behind on preparing for their financial future, and the consequences are real. Of course, saving is easier said than done, especially for those living paycheck to paycheck. For many, the pull of immediate needs and wants outweighs planning for the future.
So, how can we help people overcome these challenges using a tool that’s already in place?
With America Saves Week upon us, it’s the perfect time to pause and ask: Is your 401(k) plan truly working to get employees on track for retirement?
Spoiler Alert – It’s Not.
The data is clear—America has a retirement crisis. Workers aren’t saving enough, and it’s putting their future financial security at risk. Consider just a few recent statistics from these major institutions:
These numbers continue to confirm what many already feel: too many workers are unprepared for retirement—and it’s been this way for a long time.
Most would agree that the number one source of stress is money, which often stems from a lack of emergency savings and inadequate long-term (retirement) savings. When people are financially stressed, it impacts every area of their lives, from their personal satisfaction to absenteeism to decreased productivity. It’s a big deal! In fact, we’ve compiled some staggering stats in the infographic about the havoc financial stress reaps. This stress isn’t just a personal problem—it becomes a workplace problem.
But it’s not all grim – here’s the good news. There’s an opportunity: your company’s 401(k) plan can play a powerful role in reducing this stress and building future security.
The 401(k) Can, and Should, Get People Saving for Retirement
The 401(k) is one of the most effective tools already available to help solve the retirement crisis. And as a plan decision-maker, you have more influence than you might think.
The cornerstone of the 401(k) is its ability to automatically withdraw savings through payroll deductions. This structure gets employees to save consistently, even when they’re not actively thinking about it. But to truly make it work and change the way it has been, we have to change how we manage it.
Start with the Goal
One major reason many 401(k) plans fall short is the absence of a defined goal. The goal of a retirement plan should be simple: get employees on track for retirement. Yet too often, plans have unclear or conflicting objectives.
By clearly setting that goal—helping employees achieve retirement readiness—you give the plan real purpose. And purpose drives better results.
When We Think About Saving, Let’s Keep It Simple:
#1
- Focus on the Right KPI: Contributions Matter Most
There are 3 key drivers of retirement readiness: contributions, investment performance, and fees. But none of them matter if employees aren’t saving into the plan. PCI’s Chris Thixton, QPA, QKC, frequently says, “You can’t invest your way out of a savings problem.”
It’s not how many are participating in the plan or the activity levels of financial wellness programs. Without contributions, there is no retirement.
Being on track means the average participant is contributing enough to replace 70% or more of their income in retirement.
#2
- Automatic Features Are a Must
- Automatic enrollment and automatic escalation remove common barriers to saving. These cost-effective tools help employees start saving earlier and increase their contributions over time, without needing to take action themselves. The result? More people saving, and saving more. Plans that adopt these features consistently see improved retirement outcomes across their workforce.
#3
- Add Emergency Savings into the Plan with PLESA
- Consider integrating SECURE 2.0’s Pension-Linked Emergency Savings Account (PLESA) into your plan. PLESA accounts allow employees to save for unexpected expenses without tapping their retirement funds. It helps reduce financial stress and keep them on track for the long haul—even when life throws a curveball.
Secure 2.0 Act’s Emergency Savings Accounts (PLESA): The Most Important 401(k) Development Since Auto Features?
Let’s Change the Way We Manage It
Too few employees are on track for retirement. This is causing problems for workers, their families, and your company. The good news? The 401(k) is capable of getting employees on track. But if we want a different outcome, we have to change the way we manage it.
Employers and fiduciary committees don’t have to accept the status quo. With the right focus, your 401(k) plan can drive real change. That’s exactly what we do. At PCI, we don’t just manage your 401(k) plan—we take ownership of its performance and results.
We partner with retirement plan fiduciary committees to manage 401(k)s with one clear goal: get employees on track for retirement. With over 30 years of experience, Pension Consultants, Inc. is one of the nation’s largest and most established independent retirement plan advisers—fully focused on delivering measurable outcomes.
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