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Harry Turnwork (not his real name) is 62 years old, a UAW member in Elkhart, Indiana, and — in one narrow sense — among the luckiest low-income workers in America. He actually has a 401(k) at work.
That makes him unusual. According to the Economic Innovation Group, a staggering 70 million workers — 55.7 percent of the workforce — have no access to employer-sponsored retirement plans at all, and only 10 percent of older workers’ households in the bottom income quintile held any retirement account balance as of 2019, a figure that had fallen by more than half since 2007.
Harry has access. He has a match. By society metrics – see The New School’s Wealth Equity Lab report, Retirement Then, Now, and Next – the system worked for him and he followed all the rules.
Except that Harry has no retirement savings whatsoever. Sadly, he is not unusual; the median pre-retiree as no retirement savings.
He cashed out his 401(k) accounts — more than once, across more than one employer — to pay the bills. When he and his wife were raising three daughters, they qualified for food stamps and Medicaid most of those years. “I don’t remember a year where combined we made $40,000,” he wrote to me. When it came to a choice between putting $20 a week into a retirement account or feeding his family, the choice was not a choice. “When it takes more than your paycheck to survive,” he explained, “that $20 does enable better food options.”
This is the part of the retirement crisis that aggregate statistics obscure. The question is not merely whether low-income workers have access to a 401(k). It is whether they can afford to leave money in one. Harry could not. He is now 62 with no retirement wealth, a wife who is unable to work, a factory that may be about to close, and a plan that consists almost entirely of hoping he stays healthy enough to keep working until age 70.
Illusionist Not A Retirement Plan: Harry Faces Layoff Risk
Harry’s work-until-he-is-70 plan has a name. My colleagues Anthony Webb, Michael Papadopoulos, and I called it an illusion. In paper “The Illusory Benefits of Working Longer on Financial Preparedness for Retirement,” we found that older workers with insufficient savings are routinely advised to delay retirement — but that this advice collides with the reality of what the labor market actually offers aging workers.
Harry knows this without reading research. He is relieved is working at a plant in Elkhart, Indiana which was once a 100-year-old family business, and was bought by a new investor who has nearly bankrupted it in two years. He was told this week layoffs would begin. Eight hours later he emailed me that he may survive this round of layoffs — “I do have some seniority” — but that his youngest daughter was just laid off.
He says the company’s survival now depends on whether its largest customer pays what it owes. This fear of accounts receivables going cold is a sure sign of a recession. Harry got me worried!
Harry’s plan to work until 70 assumes a job will exist. Even if people have the health and strength to keep working past traditional retirement ages, there’s no guarantee they will be able to find a job. Our retirement system abandons older people in an unfriendly labor market at the moment they are most vulnerable to age discrimination.
Losing ACA Subsidies Meant Losing His Middle Class Status And Bowling
Harry’s finances have been gutted by a policy decision – not his own decision. His union and employer agreed that instead of providing health insurance the employer would a $1,000-a-month stipend for workers to buy their own. Before the enhanced ACA subsidies expired, Harry was able to get a family plan for $550 a month, leaving $450 left over. With the loss of the Obamacare subsidies the same plan costs $1,500 a month. He pays $387.50 a week — nearly $20,000 a year — for family health insurance.
“Just returning the old ACA subsidies,” he wrote, “would put me back into the middle class, instead of the working poor again. With affordable healthcare I am not living paycheck to paycheck and have money to invest in my future.”
To cope, he cut deep. He gave up his bowling league — he is a serious competitive bowler who once maintained a 200-plus average for two decades — and now only subs, to keep costs down. He cancelled streaming services, the car wash membership (!), everything discretionary.
Without A Pension Spouses Face More Risk
His wife, ten years his junior, is waiting on a Social Security disability decision. She has hand tremors and a damaged disc in her neck from two car accidents; her doctors agree she will not be able to work again. She will likely outlive Harry by a substantial margin. This matters enormously for their retirement arithmetic. In the most optimistic scenario — Harry works until 70, both live to around 82 — their combined Social Security income would be roughly $3,500 a month. After Harry dies, his wife would receive a survivor benefit of about $2,400 a month. That keeps her technically above the poverty line. It leaves no room for emergencies, dental bills, or the long-term care that women disproportionately need and rarely can afford.
Harry thinks about his mother, who lived on Social Security alone and managed. But his mother did not have a spouse ten years younger who might need support for another two decades. “My mother was able to live on her social security only,” he wrote, “and my payment is scheduled to be higher.” He is doing the math as best he can. The math is not kind.
Lessons for Retirement Policy And Worker Dignity
What makes Harry’s story worth telling is precisely that he is a careful, articulate, self-aware, hardworking and loyal family member. He is not unusual.
He is a lifelong worker, a union member, a careful budgeter who paid off his car loan, ran ahead on his mortgage during good years, and chose a 30-year note specifically because “if something bad happened the cheaper payment would be easier to make.” He anticipated adversity. He planned for it. But, he was still wiped out — by medical costs, by stagnant wages during his family-raising years, by a health insurance market that swallowed his savings.
Harry is the human proof that work place retirement savings should be automatic, persistent, and not subject to leakage.
Harry is also human proof that dignity requires that discipline, hard work, a little fun (with bowling), and loyalty pay off. That worker dignity requires getting a break. Being able to retire and control the pace and content of your time. Though Harry has savings discipline and financial literacy the economy delivered precarity across a working life of four-plus decades and plenty of stress at 62. His stress and precarious financial future is a system failure. And until we treat the retirement crisis as a system failure, there will be millions more Harrys — working until the job disappears, hoping Social Security holds, and watching their children start the same cycle from behind.
Median Pre-retiree has nothing. According to my own lab’s research, the median retirement account balance for Americans nearing retirement age is effectively zero — half of workers ages 55 to 64 have no retirement savings at all. The Federal Reserve’s own data confirms it: 43 percent of households in that age group had nothing set aside in a retirement account as of 2022, one of the lowest rates recorded in three decades.
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