Census Bureau Survey Underestimates Retirement Plan Participation

In an analysis of tax data conducted by the Investment Company Institute (ICI), the organization found that in 2014, 63% of workers between the ages of 26 and 64 participated or had a spouse that participated in a retirement plan.

This is higher than the findings from the U.S. Census Bureau’s Current Population Survey (CPS), the ICI says. Ever since the Census Bureau instituted a new survey in 2014, it has shown retirement plan participation to drop sharply. Rather, the ICI says, analysis of tax data shows that participation has held steady since 2008.

The ICI also discovered that participation increases with age and income. In 2014, 56% of workers between the ages of 26 and 64 participated in a retirement plan, and another 7% had a spouse that did. For workers between the ages of 45 to 64 with an income of $30,000 or more, participation by the worker or by their spouse jumps to 77%. Only 24% of workers with an income of less than $20,000 participated in a retirement plan, whereas 85% of those with an income of $100,000 or more did so.

“More American workers are benefiting from employer plans than the conventional wisdom would suggest,” says ICI Senior Economist Peter Brady. “This is for two reasons. First, the most widely cited statistics undercount retirement plan participation. Second, many only look at the headline statistic, which provides a snapshot of participation at a single point in time—but preparing for retirement is more like a movie than a snapshot. Many of the younger and lower-income workers who are not participating today will do so later in their careers.”

The ICI’s analysis is based on data from the Internal Revenue Services (IRS’s) Statistics of Income (SOI) Division. The ICI said that CPS data between 2008 and 2013 was five percentage points lower than the SOI data.