Tens of millions of private-sector workers lack access to a retirement savings plan through their employer, which experts at the AARP Public Policy Institute warn could pose a significant burden to future taxpayers.

The institute estimates that 57 million private sector workers in the U.S. – about half of the workforce – are not offered either a traditional pension or a retirement savings plan through their employer, a problem that has persisted for decades, according to David John, senior strategic policy adviser at AARP.

In April, an AARP survey showed that 20% of adults at least 50 years old had no retirement savings, and more than half were worried they would not have enough money to support them in retirement.

John said that individuals in their 50s or early 60s who are facing retirement without enough savings are in the midst of a crisis. 

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For society as a whole, he said, “It’s not a crisis right now, but it’s pretty inevitable that it will be.”

“It’s a really significant problem, and it’s one that’s going to affect all of us, because if we’re not the ones with the small retirement savings to supplement Social Security, we’re going to be the ones who are paying the taxes to help the people who didn’t have that opportunity,” John said. 

An AARP survey showed that 20% of adults at least 50 years old had no retirement savings. (Annette Riedl/picture alliance via Getty Images / Getty Images)

If many people lack adequate retirement savings, they will likely require more forms of public assistance – from nonprofit organizations or government programs. This could include support for health care needs, housing or other essential services.

To help, more than a dozen states have already set up or are in the process of implementing state-facilitated retirement savings plans for small businesses, according to John. 

Small businesses are more likely not to provide retirement savings benefits to employees compared to larger corporations. Pew Charity Trusts cited Bureau of Labor Statistics data showing that 57% of private-sector firms with fewer than 100 workers offered a retirement benefit plan as of 2023. However, 86% of companies with at least 100 workers and about 91% of firms with at least 500 workers did.

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For small businesses, their main focus is often on staying afloat, leaving little time or resources to handle such tasks. But these state programs, such as CalSavers, California’s retirement savings program for workers who do not have a way to save for retirement at work, are a way to help that does not have any cost to a small business. 

More than a dozen states have already set up or are in the process of implementing state-facilitated retirement savings plans for small businesses. (iStock / iStock)

Greg McBride, chief financial analyst for Bankrate, told FOX Business that the bigger issue is that most workers don’t recognize that they can still contribute to a retirement account independently, without relying on their employer.

“Something lost on consumers is that lack of access to a retirement savings plan through your employer doesn’t mean that you can’t save for retirement on a tax-advantaged basis,” McBride said. 

If someone or their spouse with whom they jointly file taxes with has an earned income, they are eligible to contribute to an Individual Retirement Account (IRA), which provides tax advantages for retirement savings. 

It’s estimated that 57 million private sector workers in the U.S. are not offered either a traditional pension or a retirement savings plan through their employer. (iStock / iStock)

According to the IRS, there are several types of IRAs available, including a traditional IRA, a tax-advantaged personal savings plan where contributions may be tax-deductible, and a Roth IRA, a tax-advantaged personal savings plan where contributions are not deductible but qualified distributions may be tax-free.

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While McBride said the “lack of employee-sponsored retirement savings isn’t a barrier to saving for retirement,” he did acknowledge that it is harder. There is no employee match and there are lower contribution limits for IRAs compared to workplace-based plans, according to McBride. 

Still, he doesn’t believe enough workers are taking advantage of these accounts.