Are Washington Workers Ready for Retirement? Prepared by SCEPA’s Retirement Equity Lab (ReLab) at The New School June 22, 2017

Figure 1: Retirement Plan Sponsorship – Washington Vs. U.S. Employer-Based Retirement Plan Sponsorship Rates (Percentage of workers who worked for firms that offered retirement plans to some employees)

Figure 2: Labor Force Participation – Washington Vs. U.S.

Figure 3: Retirement Plan Participation – Washington Vs. U.S.

Table 1: Washington – Trends in Sponsorship by Demographics Notes: 1) Civilian non-institutionalized population ages 25-64 who did any work the year before. 2) CPS sample weights. 3) Levels - in both 2004-06 and 2014-16, sponsorship rates were significantly lower for younger workers relative to prime age workers, those in small firms relative to workers in firms with 500 or more employees, non-citizens relative to citizens, and Hispanics relative to non-Hispanics. Differences between men and women and between blacks and whites were small and not statistically significant. 4) Trends - the decline in sponsorship was statistically significant for all groups except Blacks and older workers. 5) Differences in trends - the declines in sponsorship are expressed in percentage points, not percentages, and we therefore expect those with lower sponsorship rates in 2004-06 to experience smaller percentage point declines. Non-citizens experience significantly larger percentage point and percent declines relative to citizens. Relative to workers in the largest firms, workers in firms with 500-999 workers experienced significantly higher percentage and percentage point declines in coverage.

Table 1: Washington – Trends in Sponsorship by Demographics (cont’d) Notes: 1) Civilian non-institutionalized population ages 25-64 who did any work the year before. 2) CPS sample weights. 3) Levels - in both 2004-06 and 2014-16, sponsorship rates were lower for workers in construction, wholesale and retail, and business and repair services, relative to an arbitrarily chosen base case of manufacturing. 4) Trends - the decline in sponsorship was statistically significant for almost all sub-groups. 5) Differences in trends - the declines in sponsorship are expressed in percentage points, not percentages, and we therefore expect those with lower sponsorship rates in 2004-06 to experience smaller percentage point declines. None of the differences were statistically significant in either percentage point or percentage terms.

Figure 4: Primary Retirement Plan Type – Washington Vs. U.S.

Figure 5: Primary Plan Type by Age - Washington

Table 4a: Retirement Plan Coverage, Plan Balances, and Projected Retirement Income, Washington Notes: 1) See Figure 4. 2) We assume workers retire from their current job at age 65, and receive a DB pension of 1.5 percent of salary for each year of service. 3) We further assume that 401(k) participants contribute 6 percent of salary, plus a 50 percent match if they are not also covered by a DB plan. 4) We further assume a 4.5 percent real rate of return on plan assets, zero percent real wage growth, and that plan participants draw down DC wealth at retirement at 4 percent a year. 5) Some workers covered only by a DB plan have IRA plans as a result of rollovers from prior DC employment or direct contribution. We assume no future direct contributions to IRAs. 6) We only calculate replacement rates for older workers due to the difficulties of projecting contributions, leakages, and returns over many decades.

Table 4a: Retirement Plan Coverage, Plan Balances, and Projected Retirement Income, U.S. Notes: 1) See Figure 4. 2) We assume workers retire from their current job at age 65, and receive a DB pension of 1.5 percent of salary for each year of service. 3) We further assume that 401(k) participants contribute 6 percent of salary, plus a 50 percent match if they are not also covered by a DB plan. 4) We further assume a 4.5 percent real rate of return on plan assets, zero percent real wage growth, and that plan participants draw down DC wealth at retirement at 4 percent a year. 5) Some workers covered only by a DB plan have IRA plans as a result of rollovers from prior DC employment or direct contribution. We assume no future direct contributions to IRAs.

Figure 6: Home Ownership - Washington Vs. U.S.

Household Non-Retirement Financial Assets and Mortgage Debt in the U.S. 53% of households ages 55-64 have mortgage debt. Only 25% of households ages 55-64 with mortgage debt have enough non-retirement financial assets to cover their mortgage debt.