America has a growing retirement divide. Here’s how to close it.

Over the past five years, American workers have weathered two significant disruptive economic shocks: a global pandemic and the highest inflation in four decades. While the economy has largely recovered, the gains have been uneven. Economists now describe the rebound as “K-shaped” — those with more resources are gaining ground, while those with less are falling further behind.

Nearly three-quarters of Americans now say the economy is causing them significant stress. And for many, that strain extends well beyond day-to-day finances to their long-term financial outlook. 

The same is true for retirement savings. Despite record highs in the stock market, the wealthiest 10% of Americans own over 90% of all stock market wealth, while the bottom half of households own just 1%. Because equities make up the largest share of retirement assets, that imbalance ripples through workers’ long-term security. It helps explain why the average 401(k) balance for workers earning between $30,000 and $100,000 has declined even as markets surged. Nearly four in ten Americans don’t own any stock. 

These growing disparities are reflected in how people save — and who can afford to save at all. A record four in five Americans now believe that retirement insecurity is a national crisis, and the data shows why. 

A clearer picture of retirement security in America 

To better understand these trends, Dayforce analyzed anonymized employee records between 2021 and 2024. The resulting report, The Retirement Divide, offers the most comprehensive view yet of the state of retirement readiness in the U.S. It includes data across employer-sponsored defined contribution and benefit plans, as well as individual retirement accounts (IRAs), and captures workers who participate in a plan and those who don’t. 

The findings paint a sobering picture. While the overall workforce savings rate has improved modestly — from 8.8% in 2021 to 9.3% in 2024 — it remains far below the 12% to 15% range experts recommend. And these modest gains have not been shared equally. 

Progress for some, setbacks for others 

First, the good news. Total contributions to retirement accounts have risen by 13% since 2021. And Gen Z, who often bears the brunt of hardships in today’s world of work, offers some hope in the retirement divide. Since 2022, participation rates, savings rates, and total contributions for full-time Gen Z workers increased at a faster rate than for all other generations — with participation rising from 64% to 68.7%, savings rates improving from 6.6% to 7.2%, and total contributions rising by 24%. 

But critically, both participation and borrowing from accounts slightly worsened, and stark gaps remain for several demographic groups. 
 

• Gender: Men contributed nearly $11,000 to retirement accounts in 2024, compared to just over $8,000 for women — meaning women save less than 74 cents for every dollar men do. 
• Race and ethnicity: For every dollar a white worker saves, Black and Latino workers save roughly 46 cents. Participation rates also lag: 84.6% of white workers participate in a retirement plan, compared to 68.2% of Black workers and 61.1% of Latino workers.  
• Age: Gen Z workers may have increased their contributions faster than any other generation, but their average savings rate (7.2%) remains far below Gen X (9.8%) and Baby Boomers (10.3%).  
• Income: The divide is most striking among income levels. Workers earning under $50,000 save just 4.6% of their income on average — less than half the national rate — while those earning more than $150,000 have seen all the net gains in savings over the past three years. Nearly 95% of high-income workers participate in a retirement plan, compared to just 53% of workers earning under $50,000.                                                          

Taken together, these disparities suggest that even as overall retirement savings improve, economic inequality is widening within the workforce. And many employees risk falling permanently behind. 

What employers can do to close the gap 

Employers can play a decisive role in helping close these divides. While policy reforms are part of the solution, workplace design — from benefits to behavioral nudges — can have a faster and more measurable impact. 

2. Expand access to plans and matches. 
Shortening eligibility waiting periods and extending plan access to part-time workers can help broaden participation. Even modest employer contributions can significantly accelerate long-term savings for employees who might otherwise struggle to make consistent contributions. 

3. Strengthen employer contributions. 
Employers can consider providing guaranteed or enhanced contributions that don’t rely solely on employee deferrals. Regular contributions, regardless of employee match levels, can help reduce inequities that stem from income disparities. 

4. Support emergency and short-term savings. 
Short-term financial stress is one of the biggest threats to long-term saving. Employers that provide tools or accounts for emergency savings help employees manage unexpected costs without tapping into their retirement funds. This approach supports financial resilience and protects future retirement security. 

5. Simplify rollovers and portability. 
Helping employees consolidate their prior accounts and avoid early withdrawal fees can make a significant difference over time. Automatic rollover and portability solutions ensure that workers, especially those who frequently change jobs, don’t lose track of small balances that can grow meaningfully over the course of their careers. 

Building a more inclusive future for retirement 

There’s little evidence that these trends will reverse on their own. Nearly four in ten working families are on track to retire with a lower standard of living than they have today. But this trajectory can change — and employers can lead the charge. 

True retirement security isn’t just about savings. It’s about inclusion, stability, and dignity. When organizations take an equitable approach to financial well-being — one that reflects the realities of a diverse workforce — they help people retire comfortably and live better throughout their working lives.