The implementation of SECURE 2.0 holds potential to narrow the retirement savings disparity. While larger companies typically offer more robust retirement benefits, smaller companies are gaining ground due to SECURE 2.0 provisions.
The Transamerica Institute’s study reveals that workers’ median total household retirement savings is $65,000, but this varies by company size. Small company employees have $36,000 in savings, compared to $69,000 for medium company workers and $115,000 for large company employees.
Employees across the board are diversifying their retirement income sources. Those at larger companies cite 401(k)s, 403(b)s, and IRAs, while smaller company workers lean on continued work. Currently, 58% of employers provide a 401(k) or similar retirement plan, favoring larger firms.
Around 42% of non-offering companies intend to start a plan within two years. The SECURE 2.0 Act eases the process for small businesses to adopt retirement plans. Moreover, 58% of 401(k) offering companies extend eligibility to part-time employees, as required by the SECURE Act of 2019 and SECURE 2.0 Act of 2022.
A notable 37% of workers use retirement savings prematurely. The SECURE 2.0 Act introduces changes, including penalty exceptions and emergency savings accounts, aiming to alleviate this concern.
Enhancing retirement security involves expanding plan coverage for all workers and extending eligibility to part-timers. Employers should assess SECURE 2.0’s impact on their plans and ensure employees maximize available resources.
