America is facing a retirement crisis. By some estimates, nearly 47% of current and future retirees (among them boomers, Gen Xers, millennials and Gen Zers) are expected to exhaust their savings in retirement. But for those still saving — or who haven’t begun to — one complicating factor is that not all employers offer retirement benefits.
Data from the Economic Innovation Group, a bipartisan public policy organization, shows that 41.4% of full-time workers don’t have access to an employer-sponsored retirement plan, and 49.9% of plan participants don’t receive an employer match. That translates to:
- 38.7 million full-time employees who lack access to these plans
- 46.6 million full-time employees without an employer match
The numbers are starker for lower-income Americans. A staggering 74.8% of the nation’s lowest-earning full-time workers don’t have access to a retirement plan, compared to just 17.3% of the highest-earning full-time workers.
As a result, the onus of saving falls on them. The first step in shouldering that responsibility is understanding the power of individual retirement accounts, or IRAs, and compound interest. IRAs are tax-advantaged accounts that allow you to invest either pre-tax (traditional IRA) or post-tax (Roth IRA) funds, and because of their ability to compound over time, they can help produce a sizable nest egg for your golden years.
For example, the current annual contribution limit of $7,000 per year equates to $134.61 per week. By dedicating that weekly amount to an IRA and investing that money in an S&P 500 index fund with an average annual return of 10%, you can potentially accrue an estimated $1,897,171 after 35 years.
Of course, not everyone can afford to set aside that much money each week. But even if you’re not able to maximize your annual IRA contribution, something is better than nothing. Even halving that weekly contribution would result in an estimated $948,585 saved for retirement over 35 years.
The key is starting today. Not tomorrow, not next week. Today.
— Jordan Chussler, investing and banking editor 
