Colorado Workers Face a Retirement Crisis

Although Colorado’s economy has strengthened in the past two years, and we experienced significant job growth and lower unemployment, the percentage of workers who do not have a retirement savings plan at their workplace has remained unchanged since 2014 at 45 percent. Moreover, that number has grown from 38 percent in 1997-1999.

Today, almost 900,000 Colorado private-sector workers in their prime working years are not participating in traditional pensions or 401(k)-type retirement savings plans at work. More than 80 percent of these workers — or 753,972 Coloradans — work for employers that do not offer any form of retirement savings plan, making lack of access the top reason that Coloradans have a hard time saving for retirement.

Most experts conclude that putting away a little money from each paycheck through workplace deductions is the most effective way to save for retirement. Not having access to this option means that a significant portion of Colorado’s private-sector workers will be almost totally dependent on income from Social Security in retirement. Yet Social Security is only intended to replace about 40 percent of a worker’s income.

Low-wage workers, members of minority groups, young workers and those working in small businesses are the least likely to have a retirement savings plan at work — and for some access has declined in the two-year period since we last studied this issue — and they are less likely to participate in a plan if one is offered. White workers in Colorado are 30 percent more likely to work for an employer that offers a workplace retirement plan than are minority workers and are 40 percent more likely to participate in a plan when offered.

Those who can save adequately for retirement during their working years are more likely to be self-sufficient when they retire. They will need less help from family and social programs and be better positioned to pass assets along to the next generation. Those who are not able to save adequately are more likely to live in poverty and need help to make ends meet. Younger workers will be less able to save for their own futures as more of their resources are needed to help support their parents and grandparents.

This Bell Policy Center brief uses the most recent data available to show the extent to which Colorado’s private-sector workers in their prime working years have access to and participate in workplace retirement savings plans. It also describes policy initiatives being undertaken by several states to provide workplace retirement plans to private-sector workers. Finally, it lays out a proposal to create the Colorado Secure Savings Plan, a public-private partnership to provide workplace retirement savings accounts for Colorado private-sector workers who do not have access to one.