Why Are So Many People Not Saving for Retirement—Even with Access to a Plan?

Why Are So Many People Not Saving for Retirement—Even with Access to a Plan?

If you’ve ever felt unsure about how to start saving for retirement—or wondered whether you’re missing out on benefits—you’re far from alone. Ascensus’ recently released Eligible Not Contributing Employee (ELND) Survey revealed just how common that uncertainty really is. Despite being eligible to participate in their workplace retirement plan, many employees simply don’t take the first step—and the reasons aren’t what you might expect. A full 60% of non‑participants say confusion and lack of awareness hold them back, compared with only 23% who cite affordability. Even more striking: 30% of employees told us they don’t understand how their plan works or how to get started at all.

Here we’ll break down what’s behind that confusion, especially the specific challenges faced by different groups like Gen Z, and offer simple, practical guidance to help turn hesitation into confident action.

What confuses people about their retirement plan?

Most employees want to save for retirement but feel overwhelmed by complex benefits materials and financial jargon. The ELND findings indicate that lack of plan awareness and understanding of features (like the employer match) account for the majority of inaction, not cost. When the basics aren’t explained clearly, it’s easy to miss valuable opportunities to build long‑term wealth.

Why employees delay contributing

There’s a widespread misconception that “I can’t afford it” is the main reason people don’t enroll.  But as the survey points out, only a small percentage cite cost as a barrier, with considerably more listing uncertainty about how their plan works or how to get started as their biggest challenge. That lack of clarity can have lasting consequences and highlights a broader issue: without clear guidance, even eligible employees who are interested in enrolling struggle to take the first step.

"If employees do not understand their plans or how to begin, they rarely take action. Clearer onboarding and enrollment, smarter personalization to encourage savings, and coordinated education with employers all help more individuals move from eligibility to actively saving, according to Nick Good, CEO of Ascensus.”  

 

Generational differences are also at play when it comes to enrollment rates. More than half of Gen Z workers eligible to enroll are not participating (50.5%), compared with just over 38% of Millenials and 37% of Gen X—underscoring the need for modern, digital‑native communications for younger employees.

Understanding your retirement plan can make saving easier

Gaining clarity on how to save for retirement and a few 401(k) basics can reduce anxiety and build confidence:

  • Employer match. If your company matches contributions up to, say, 6% of your salary, that’s money added to your account because you decided to save—a powerful incentive many people overlook.
  • Pre‑tax contributions. With a traditional workplace plan, contributions are deducted before taxes, which can lower your taxable income. For example, if you earn $4,000 a month and contribute $200, you’re taxed on $3,800, not $4,000.
  • Plain‑language onboarding. Employees say clearer plan understanding would motivate them—27% flagged this specifically—alongside simplified enrollment (10%).

Once you get past the initial steps, the process becomes far less daunting, and far more rewarding.

Waiting to start saving makes it harder later

It’s easy to say, “I’ll start saving for retirement next year,” but procrastination is risky because if an employee stays unenrolled for 24 months, their chance of never enrolling doubles  .

Starting early also allows compound interest to do the heavy lifting. When the interest you earn begins to earn interest on its own, it snowballs growth over time. To illustrate this, two savers who contribute the same total dollars can end up with dramatically different outcomes depending on when they start.

What helps people feel ready to start contributing to their retirement? 

People don’t want to navigate retirement decisions alone—they want guidance, clarity, and simple enrollment. In fact, 50% of employees cite targeted education and specific plan enhancements as motivators to start saving (with 27% pointing to improved plan understanding, 13% to an employer match, and 10% to simplified enrollment).

When workers feel supported and know exactly what they’re signing up for, participation rises. If you’re eligible but not yet contributing, here’s a straightforward path:

  • Confirm eligibility & match. Review your benefits and ask HR what’s offered—especially the employer match, if available.
  • Start small. Begin with 1–2% and nudge it up over time; the key is just to start.
  • Use retirement education resources. Tap into your company’s retirement savings resources to build understanding and confidence.

Take control of your financial future

The ELND findings echo a broader, retirement industry‑wide challenge: nearly half of U.S. households are at risk of not having enough income in retirement, and four in ten U.S. adults aren’t confident their money will last—evidence that uncertainty and lack of preparedness are widespread.

Don’t let terminology hold you back from using the benefits you’ve earned. As you clear away confusion, you can take real control of your financial path—review your workplace plan today, ask questions, and take that first step toward enrollment. If you’re already enrolled, take a moment to log in, check your current contribution rate, and make sure you’re on track for your long‑term goals.

Ascensus remains focused on turning uncertainty into action through clearer onboarding, smarter personalization, and coordinated education with employers—helping more people move from eligible to actively saving.