In the 1980s and 1990s, approximately 60–70% of retired Americans received income from a pension—primarily through defined benefit plans. This was the peak era of traditional employer-sponsored retirement security before the shift to 401(k)-style defined contribution plans.
Today, about 20% of private sector workers have a pension.
In the 1970s, Congress introduced the IRA and 401(k) programs and provided incentives for retirees to self fund their own retirement accounts by saving and investing.
A side effect of the loss of pensions – retirement is now self-funded – and the Social Security Full Retirement range was changed from 65 to age 67. About 1 in 5 workers age 65 and up are working (60% part time, 40% full time). This is an increase from less than 12% in 1990.
In the 1980s-90s, up to 70% of retired workers had a pension (and Social Security). Today, less than 1 in 5 private sector workers has a pension. Instead, they have self-funded and self-directed IRAs and 401(k)s.
Numerous social media posts on X display charts showing asset levels of retirees – and find that retirees have more assets than younger generations. This is often portrayed as a bad thing – retirees are evil and have taken all the assets!
But this is, in fact, by design of Congress. In 1974, Congress introduced the Individual Retirement Account (IRA) and in 1978, added the 401(k) account. Today’s retirees did what the government wanted them to do – save an invest to fund their own retirements.
In a rational world, this would be viewed as a good thing. On social media, it is portrayed as a bad thing by evil retirees.
📊 Pension Coverage Among Retirees
- 1980s:
- About 68% of retirees had income from a defined benefit pension.
- These pensions provided guaranteed monthly income, often based on years of service and final salary.
- Coverage was highest among unionized workers, government employees, and large corporate retirees.
- 1990s:
- Pension coverage remained strong, with 60–65% of retirees receiving pension income.
- However, the decline had begun:
- Employers started freezing or replacing defined benefit plans with defined contribution plans (e.g., 401(k)s).
- Private-sector pension plan participation dropped from 39% in 1980 to 22% by 2000.
Sources:
- U.S. Department of Labor – Private Pension Plan Bulletin
- SSA – The Disappearing Defined Benefit Pension
- BLS – ERISA at 50
More
As of 2025, only about 14% of private-sector workers in the United States are eligible to participate in a traditional defined benefit pension plan.
The vast majority—around 70%—have access to defined contribution plans like 401(k)s instead.
🧾 Breakdown of Retirement Plan Eligibility (2025)
According to the U.S. Bureau of Labor Statistics:
- Defined benefit pensions:
- 14% of private-sector workers have access to a current or future pension.
- This includes workers in legacy union contracts, government roles, and large corporations that still offer pensions.
- Defined contribution plans (e.g., 401(k), 403(b)):
- 70% of private-sector workers are eligible.
- These plans shift investment risk and responsibility to the individual.
- Overall retirement plan access:
- 72% of private-sector workers have access to some form of employer-sponsored retirement plan.
- Access varies by employer size:
- 59% in firms with <100 employees
- 86% in firms with 100–499 employees
- 90% in firms with ≥500 employees
Sources:
- BLS – Employee Benefits in the United States, March 2025
- Transamerica Retirement Survey 2025
- Vanguard Retirement Outlook 2025
