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Pensions are gone. Not really, but in the private sector they are scarce in 2026. State and federal workers and many colleges (especially public institutions) still benefit from traditional pensions.
Today about 14% of private-sector workers have access to a defined benefit (DB) pension plan. (BLS data for March 2025/2026).
The highest percentage of private-sector workers with a traditional defined benefit (DB) pension was in the mid-to-late 1970s, peaking around 45%.
The value of employer pensions to most workers is overstated. Of course, to those of us who worked for one employer for decades, the value of a pension cannot be overstated, but there are not many of us around.
Most workers do not and never have stayed with one pension plan sponsor long enough to get meaningful value from a pension. The average job tenure is barely enough to become vested in a future pension benefit.
While we may lament the loss of pensions, I see a larger issue – a shocking low level of retirement account participation and quite modest account balances for those with accounts. The data surely don’t seem consistent with the more sophisticated HD community.
Private-sector defined benefit plans, including union plans, pay out benefits to roughly 2.5 million to 3 million retirees directly (or through annuities purchased via life insurers). An additional ~926,000 retirees receive benefits directly through trusteed single-employer plans administered by the Pension Benefit Guaranty Corporation (PBGC).
Rather than focus on the percentage of those with an account, I see a problem with the percentage of workers who don’t. What are they thinking? What will their future look like?
In 2025, 45% plus of households headed by someone in their 20s had a retirement account, such as an IRA or 401(k), according to the Survey of Consumer Finances (SCF) The share then climbs above 53% in the 30s, to 63% in the 40s, and then a bit higher in the 50s. Still not great.
How much has been saved for retirement naturally depends on age.
Among account holders, the median balance climbs from $12,600 in the 20s to $250,000 in the 60s and 70s.
As we know, starting to save and invest early matters. Modest savings at younger ages is an advantage even if circumstances require cutting back or suspending during middle age. Even relatively small contributions can grow substantially over time because of compounding returns.
The primary reasons people give for lack of retirement accounts are: insufficient income, competing financial obligations, procrastination, limited financial literacy, lack of access to retirement plans, unexpected expenses, and fear or misconceptions about investing.
Just excuses. I especially like the “lack of access to retirement plans” which is absurd. Except for perhaps the lowest income quintile, the ability to save something for retirement exists. The trick is always save first, pretend what you save is income tax withholding; you never have that money to use.
Does that mean that between ages 20 and say 65, you give up a few things you may want in exchange for a better future? Yeah, it does.
I see significant long term consequences for this retirement saving dilemma.
Reduced consumer spending, labor force participation changes affecting job opportunities for younger workers, higher public borrowing or taxes to cover shortfalls.
Working-age taxpayers would face higher effective costs to support a larger retiree population with inadequate private resources. More seniors could face lower living standards, higher poverty risk and all that goes with it including greater reliance on family which has a negative compounding impact.
Given the reasons many people claim they can’t save for retirement or simply their irresponsibility, I see the solution as something I would not have suggested only ten years ago – higher Social Security benefits funded by higher taxes or in reality, a form of forced savings. Pay now or society pays later.
Alternative suggestions are welcome.
Why can’t the US adopt a system like the UK’s automatic enrolment?
In the UK, all employers are legally required to set up a workplace pension and automatically enrol employees. Under the minimum rules, 5% of the employee’s earnings goes into their pension, alongside a legally required 3% from the employer, for a total of 8%. Employers can contribute more if they want to attract staff.
It isn’t perfect, but putting 8% aside from your very first job is a strong start.
Employees can opt out, yet the data since the scheme launched shows that inertia keeps opt-out rates low. The pension also belongs to the individual and moves with them between jobs.
So why couldn’t the US do something
similar?
Good question. You see here in the US that would be called “socialism.” We want freedom, choice, individual responsibility, empowerment.
The closest thing we have is our Social Security. Mandatory, jointly funded by employer and employees, but inadequate as retirement income unless the individual supplements it in some way and that is where the problem comes in. Too many people don’t understand the importance of that piece or are simply irresponsible (with a minority simply unable to do such funding).
Hmm. Is this another Quinn classic punching down thread?
People as a whole make dumb decisions. They choose instant gratification, the house that puts them at the limit of mortgage capacity, the expensive car leases, the boat/RV, the spendy holidays. They choose to have more kids than they can bankroll comfortably through to adult independence. And probably majorly they suck at choosing life partners and maintaining financial health through that stability.
But they are just people and if you live a life trying to mitigate all of the above you don’t really live your life.
At least DB pensions saved them from a lot of the longer term consequences of the short term folly.
If we assume the level of personal financial education is low and some people have a visceral fear of engaging and certainly of decision making when it comes to investments in retirement accounts then none of this is a surprise. If they are lucky (or have good friends who actually nag them about it) they wake up around the age of 40 earning a bit of surplus cash and get proactive with their own futures.
Wildcard – but it kinda works in the UK. Maybe you need a punitive personal tax regime that gets everyone focused on putting pre-tax money into their 401K etc rather than bear effective tax rates of up to 60%.