Retirement security is one of the biggest economic issues facing Texans today. In a state where hard work and self-reliance are core values, it’s critical that every worker has the tools they need to save and build wealth for the future. Fortunately, our country’s system of 401(k)s, Individual Retirement Accounts (IRAs), and similar retirement accounts has made saving for the future more accessible and effective than ever before. Strengthening the current retirement system will help even more Texans achieve financial independence in their golden years, especially as Congress considers extending President Trump’s 2017 tax cuts.
At a time when economic uncertainty is a growing concern, we must double down on what works. Strengthening and expanding 401(k)s and IRAs is the best way to ensure that more Texans, regardless of income level, have the ability to build financial security for the future. A strong retirement system is not just a benefit to individual workers, it’s an investment in the long-term prosperity of our state. I hope our senators and representatives stand strong in Washington and continue to support policies that expand retirement savings opportunities, so that every hardworking Texan has the chance to retire with dignity and peace of mind.
Millions of families around Texas rely on 401(k)s and IRAs to build wealth and prepare for retirement. These accounts have strengthened the middle class by giving Texans of all income levels and backgrounds a structured pathway to long-term financial security. With strong support from Congress over the years, access to workplace retirement plans has expanded. It has been a winner for Texans and for all Americans: across the country more people are saving for retirement today than ever before.
Automatic enrollment, automatic increases in contribution rates, and automatic investing strategies, such as target-date funds, have helped put workers, especially young and lower-income workers, on a smooth savings trajectory. Today, nearly 90% of 401(k) participants are in plans with employer contributions, which significantly boosts their ability to grow their savings over time. Additionally, these plans play a crucial role in promoting financial inclusion: nearly 80% of Black households that own mutual funds were first introduced to investing through their workplace retirement plan.
Today, roughly 83% of households with 401(k)s or similar plans earn less than $200,000 per year, with nearly half earning under $100,000 annually. These plans are not just for the wealthy; they are an essential tool for middle-class families looking to build a secure future.
Thanks to the growth of 401(k)s and IRAs, the average household’s retirement assets are nearly ten times what they were 50 years ago, even when adjusting for inflation. Furthermore, the typical 72-year-old today replaces more than 90% of their pre-retirement spendable income, ensuring they can maintain a stable quality of life after leaving the workforce.
For the country’s youngest workers, the numbers are even more promising. The percentage of Gen Z households with a retirement account is twice that of similar-age Gen X households in 1989. When adjusted for inflation, Gen Z and Millennial households have more than double the savings in 401(k)s and similar plans than their counterparts had decades ago. This growth is proof that smart policy decisions—such as expanding access to employer-sponsored retirement plans—deliver real, long-term benefits to working families.
Despite this progress, there is still work to be done. Ensuring that every Texan has access to a high-quality retirement plan should be a bipartisan priority. Our representatives in Congress should focus on removing barriers to workplace retirement savings, encouraging employers—especially small businesses—to offer 401(k)s, and improving financial education so that more workers understand how to take full advantage of these benefits.
Bill Frazer is managing director for RCREF and a board member of the Houston Society of CPAs.