Summary
Employment-based retirement plans are the most common source of funding for retirement income outside of the Social Security system. There have been many studies on participation in employment-based plans at a specific point in time, but there has been much less analysis of participation in retirement plans over a worker’s career. This is particularly relevant, given that the median tenure of workers has been around five years for nearly the past four decades, which means that workers will change jobs a significant number of times over their careers. What happens to retirement plan participation when this job change occurs is important for policymakers and plan sponsors to understand when designing retirement policy and plans, as workers may be new to plans, may have been without a plan for some time, or may be continuing to participate when they change jobs. This study uses the National Longitudinal Survey of Youth 1979 Panel (NLS79) to follow a cohort of workers through their working careers to better understand the dynamic of retirement plan participation as they change jobs. These data allow for the following of workers from the time they started in the work force in the 1980s through 2022.
Key findings:
- The rate at which workers switched jobs decreased over time, from an average of 38.4 percent of workers changing jobs in 1996, when workers’ ages ranged from 31 to 39, to 25.5 percent of workers changing jobs in 2022, when workers’ ages ranged from 57 to 65. The average worker held over eight primary jobs by 2022.
- When a worker did have a retirement plan at a job, they were more likely to stay at that job compared with workers who did not have a plan. For example, in 1996 76.8 percent of retirement plan participants were still at the same job they had had in 1994 compared with just 58.1 percent of those who were not retirement plan participants.
- Among workers who changed jobs from 1996–2022, an average of 43.8 percent moved from a job without a retirement plan to another job without a retirement plan, while an average of 20.9 percent had a retirement plan at both jobs. An average of 15.3 percent gained a plan upon job change. while an average of 20.0 percent lost a plan.
- Several factors make it more likely that a worker gains or retains a retirement plan when switching jobs. Across all survey years, workers with higher incomes were on average 26.3 percent more likely to retain or gain a plan after a job change compared with workers with lower incomes, while workers with higher education were 19.1 percent more likely to retain or gain a plan after a job change compared with workers with lower education.
- Most workers participated in a retirement plan at some point by 2022. For instance, 82.1 percent of workers who were present for all 15 survey rounds from 1994–2022 had held a retirement plan in at least one survey year over this time period. About 43.4 percent of these workers participated in a retirement plan for over half of the survey’s study period.
Ultimately, given that job change is a continuous feature of the U.S. labor market, many workers will find themselves in a situation where they do not have a retirement plan at their job. However, most workers will have an employment-based retirement plan at least once in their life. Thus, helping workers to make the most of their opportunities to save through employment-based plans is vital in increasing workers’ likelihoods of having a financially secure retirement.