WASHINGTON — Virginians who work at low-wage jobs often don’t have a workplace retirement plan so they can save money through payroll deductions.
A new study finds a similar gap between rural and urban workers, across the country.
The research by the Economic Innovation Group finds rural workers are less likely to have an employer-based retirement account compared to their urban counterparts.
Among high-income workers in both areas, the disparity narrows.
But overall, Sarah Eckhardt — a research associate with the Economic Innovation Group — said the gap between people in rural and urban settings who are offered a workplace retirement account is wide.
“Over half of full-time workers in rural areas do not have access to any kind of employer-based retirement plan,” said Eckhardt. “This number is only 40% for people who live in urban areas. This is quite substantial and becomes even more salient when you look at the amount that people are actually able to save.”
To help close the gap, Eckhardt’s group is urging Congress to take up the Retirement Savings for Americans Act.
The bill would create retirement accounts for employees without one — and offer tax credits for lower-income workers as a matching contribution.
It has bipartisan support, but has sat in committee in Congress since 2023.
And it’s about more than having a workplace retirement account. The disparity also includes how much people are able to save. The study found rural workers who do have a retirement plan have saved $55,000 less than their urban counterparts.
Eckhardt said the difference has real-world impacts on rural workers.
“Outside of retirement accounts, they tend to have fewer assets than people in urban places do, which means that they are less able to accumulate wealth and save for retirement,” said Eckhardt. “Which could have consequences for how long they’re in the labor force. Rural workers could be forced to work for more years than urban workers do, in order to make enough money to pay for their retirement years.”
Eckhardt added that those gaps in retirement funds mean rural workers rely more heavily on Social Security — and more frequently end up in poverty in their retirement years.
