Business & Real Estate

Half of California’s private sector workers have no savings for retirement, study says

Millions of California workers have no money saved for retirement, are doing little to catch up or are shut out of employer-offered savings plans altogether, a newly released UC Berkeley study shows.

“It turns out that California private sector workers are not merely behind on saving for retirement; half do not own retirement assets and most are currently not saving for retirement at all,” wrote Nari Rhee, Retirement Security Program director at UC Berkeley’s Center for Labor Research and Education. “With half of California private sector workers lacking retirement assets, the state is at risk of each generation retiring less prosperous than the last.”

It’s a looming crisis, the study suggests, with potential long-term consequences for a graying California.

Simply put, Rhee said in a news release announcing her findings, “When it comes to retirement income security, most working Californians are in trouble.”

Rhee based her findings on the Census Bureau’s Current Population Survey and 2014 Survey on Income and Program Participation. The findings dovetailed with the July 1 launch of CalSavers - the state’s automatic retirement savings program for private sector workers.

Private employers with five or more workers that do not offer 401(k) savings plans or pensions must enroll their workers in the state-sponsored IRA.


Nearly half of the state’s private sector workers have no dedicated retirement assets – individual retirement accounts, employer-provided 401(k) plans, pensions or profit-sharing programs.

And 54 percent of Californians ages 25-64 who work in the private sector do not have a retirement account of any kind or participate in a pension plan, according to the findings.

The numbers are more stark the further down workers are on the income scale. The study identifies those employees in the bottom 40 percent of earnings as low-income workers. A full 75 percent of those workers had no nest egg other than Social Security, according to the report.

The blame doesn’t rest solely at the feet of California workers, Rhee says.

Rather, it is part of a deepening retirement crisis in California decades in the making as fewer private sector employers offer traditional pension plans in favor of 401(k)s or provide retirement plans of any sort; and as workers have to wait longer to draw full Social Security retirement benefits. Full retirement age is 66 years, six months for those who turn 62 this year. Under current law, retirement age will tick up two months each year until it reaches 67.

Today, fewer employees have access to workplace retirement saving plans than two decades ago, according to the study.

In 1997, roughly half – 49 percent – of workers in the private sector had no access to a retirement plan through their work. By 2017, the percentage of employees without a workplace pension or 401(k) plan had grown to 61 percent.

The dominoes set in motion by a lack of retirement savings are many, Rhee said: higher numbers of impoverished seniors trigger a greater demand for public assistance and the tax dollars to pay for it. More Californians with shrinking incomes signal economic and fiscal problems down the road.

The Labor Center promised a deeper dive into how prepared working Californians are for retirement in a later study, but CalSavers officials say evidence is clear that workers and the businesses that employ them still have much work to do.

“Every Californian deserves a chance to retire in dignity after a lifetime of work,” said Katie Selenski, CalSavers’ executive director, in a statement. “This study underscores how far we have to go to get there.”

Related stories from Sacramento Bee

Darrell Smith covers courts and California news for The Sacramento Bee. He joined The Bee in 2006 and previously worked at newspapers in Palm Springs, Colorado Springs, Colo., and Marysville. A Sacramento Valley native, Smith was born and raised at Beale Air Force Base, near Marysville.