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The Future of Work and Retirement Savings

3 min read

Many Americans have saved too little for retirement; now they may have an effective tool that can get them back on track.

State legislators in Michigan have introduced bills to make saving easier by automatically enrolling workers into an IRA via payroll deductions. California, Colorado and Illinois already offer similar programs; now Michigan may follow suit and join these states in offering this type of program to workers.


Automation via technologies like online collaboration tools, AI, and additive manufacturing is revolutionizing work. Automation could replace some jobs with complementary tasks in advanced economies; workers who perform nonroutine, cognitive tasks that are enhanced instead of replaced by technology may see rising wages.

Low-wage services-sector jobs and blue-collar work requiring routine manual skills are most vulnerable to automation; however, organizations that can keep pace with technological change by training employees and offering opportunities for advancement will experience higher productivity gains than those who cannot keep pace.

Many fear automation will steal their jobs, but this is unlikely. Take ATMs as an example – while ATMs replaced bank tellers, they freed them up to provide personalized financial services and customer experiences. Automation may free employees up from menial tasks that get in their way so they can focus on strategic or creative work that improves employee morale while increasing business efficiency.

The Gig Economy

Modern workplaces have changed to enable individuals to supplement their income with gig work, such as freelance consulting, contracting and temporary positions. With its flexible work arrangements and extra earnings potential, gig work arrangements have become more appealing over time – from its origins in 1910s jazz lounges and clubs through today’s technological advances and an increased willingness to explore alternative job opportunities.

While these workers often seek independence through self-employment, there is often not much money left over after covering living expenses and other essentials to save for retirement. They do not enjoy access to a company-sponsored savings plan with employer matching contributions as traditional employees do – making it even more crucial that these workers take charge of their own long-term financial affairs by starting to save early in their careers.

The Aging Workforce

Work and retirement are increasingly blurred as an aging workforce changes the face of work. Yet many firms remain stuck in an outdated view by adhering to policies which discourage older employees from remaining on the job longer.

Now is the time for change: firms that recruit, retrain and respect older workers can not only fill talent gaps more easily but also create high-quality jobs that leverage these employees’ abilities as a competitive advantage – research from OECD supports this claim.

One strategy is to offer flexible working arrangements that cater specifically to older workers, like part-time and remote work arrangements. SAP, for example, has introduced its Mature Talents program which brings younger and older workers together for mutual mentoring purposes and defuses tensions in the workplace while making it more age-inclusive.

Retirement Savings

Despite recent gains in life expectancy, millions of Americans are not saving enough to enjoy an adequate retirement lifestyle. Some may postpone retirement altogether or return to some capacity of employment in later years.

Pensions were once seen as a source of reliable post-career income; today however they’ve given way to 401(k) plans and other savings vehicles which put more responsibility on workers to save for retirement. Many employers, particularly smaller enterprises like daycare centers, hair salons, and auto shops don’t have access to retirement plans; states like Oregon, California and Illinois have introduced automatic individual retirement accounts as an easy way for workers to save without an employer-sponsored plan.

State and federal governments face an ever-increasing fiscal burden due to insufficient retirement savings, leading to increased public assistance costs, decreased tax revenue, lower household spending and standards of living for senior citizens, as well as reduced household spending overall. Pew has created a tool that measures the impact that insufficient savings have across each state and federal government entity.

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