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Trump cites 401(k) gains, yet most workers don't have one

  • Trump pointed out the strong performance of the stock market, saying it has led to Americans' savings accounts going "through the roof."
  • At companies that offer 401(k) plans, less than half of employees participate.
  • The median account balance is less than $25,000.
President Donald Trump applauds while delivering a State of the Union address to a joint session of Congress at the U.S. Capitol in Washington, D.C., U.S., on Tuesday, Jan. 30, 2018.
Win McNamee | Bloomberg | Getty Images
President Donald Trump applauds while delivering a State of the Union address to a joint session of Congress at the U.S. Capitol in Washington, D.C., U.S., on Tuesday, Jan. 30, 2018.

President Donald Trump touted the strong performance of 401(k) accounts during his first State of the Union address.

The reality is that most Americans do not have one.

"The great news for Americans — 401(k) retirement pension and college savings accounts have gone through the roof," Trump said, veering slightly from his prepared speech, in his 80-minute address Tuesday night.

Only about one-third of workers participate in a 401(k) plan, according to 2017 research from the U.S. Census Bureau. In fact, just 14 percent of all employers have a 401(k) or other defined contribution plan for their workers. Even at companies where they are offered, only 41 percent of employees contribute.

Among small business, it's less likely that a 401(k) is even available. On average, 10 percent of companies with fewer than 100 employees offer a retirement plan, according to new research from retirement savings platform Finhabits.

How many employers offer defined contribution plans

# of employees
Percent that offer a plan
1 3.4%
2 to 9 7.3%
10 to 24 20.2%
25 to 49 32.6%
50 to 99 46.5%
100 to 499 68.5%
500 to 1,000 83.5%
1,000 to 10,000 88.4%
10,000 or more 92.9%
Source: U.S. Census Bureau

Among employees who do sock away pretax dollars in 401(k) accounts, the average balance was $96,495 in 2016, according to Vanguard research. The median balance — half are above, half fall below — was $24,713.

The S&P 500 stock index surged more than 19 percent in 2017 and is up more than 5 percent this year.