Summary
Due to the importance of employer-sponsored retirement plans as the largest source of retirement funds for most Americans besides Social Security, it is worthwhile to examine how eligibility in these plans changes as a worker moves through their career path. Factors such as age, tenure, and education may make one more or less likely to be eligible for a retirement plan at a job. Furthermore, changing jobs could also impact retirement plan eligibility. For example, one could no longer have access to an employer-sponsored retirement plan at the new job. A previous Issue Brief examining the National Longitudinal Survey of Youth 1979 Panel (NLSY79) illuminated these trends in employment shifts and the accompanying change in retirement plan participation among Americans who were born between 1957 and 1964. This study uses the National Longitudinal Survey of Youth 1997 Panel (NLSY97) to perform a similar analysis for Americans born between 1980 and 1984, as well as to investigate how this younger cohort compares with the previous survey cohort.
Key findings:
- Job change frequency differed significantly by income for NLSY79 and NLSY97 participants. In the NLSY79, lower-income participants changed jobs 26.2 percentage points more on average than higher-income participants, while in the NLSY97, this gap was 18.4 percent.
- When NLSY97 subjects were ages 18–23, they had held an average of 3.5 jobs, while NLSY79 subjects who were ages 17–25 held an average of 3.4 jobs. By age 43, both cohorts had held over 10 jobs on average.
- Changing jobs often led to shifts in employer-sponsored retirement plan eligibility, with over 30 percent of NLSY79 and NLSY97 participants gaining or losing plan eligibility when switching jobs.
- Most NLSY97 subjects had been eligible for a retirement plan at some point by 2023. By the ages of 39 and 40, over 85 percent of NLSY97 subjects and over 75 percent of NLSY79 subjects had been eligible for a plan at least once.
- For both the NLSY97 and NLSY79 surveys, those with above median income and tenure were eligible for a plan for more than twice as many consecutive years, on average, as those with below-median income and tenure, while those with an associate degree or higher were eligible for a plan for around 1.5 times as many average consecutive years as those with a high school diploma or less.
Comparing the NLSY97 and the NLSY79 can reveal potential changes in employer-sponsored retirement plan eligibility across different generations of Americans. While both generations faced potential disruption of plan eligibility after a job change, the younger cohort was more likely to gain and less likely to lose plan eligibility when such a switch occurred. Most workers will be eligible for such a plan at least once in their life, with a rise in eligibility for younger workers potentially increasing their likelihoods of having a financially secure retirement.