Pensions Remain Key Income Source for Retirees Despite Declining Access
Despite declining access, pensions continue to be an important source of income for many retirees in the United States. Only 29% of current workers have a defined benefit (DB) pension plan, with even fewer younger employees having such benefits—just 5% among those aged 18–24. In contrast, over half of Americans aged 65 and older receive some form of pension income. The shift from DB to defined contribution plans like 401(k)s has largely affected the private sector, where only 14% of workers had access to a pension in early 2025 compared to 86% for public-sector employees. Public-sector pensions are generally more generous than those offered by corporations. In 2024, state and local government retirees received median annual benefits of $24,930 versus just $11,440 in the private sector. This disparity is partly due to differences in Social Security coverage and years worked under pension plans. As a result, many older workers who retired when pensions were more common still rely on them for financial stability. The decline of traditional pensions has shifted retirement planning responsibilities onto individuals, requiring higher personal savings rates among those without employer-sponsored benefits. This trend is expected to continue as younger generations face even less access to DB plans.
Topics: Defined benefit vs. defined contribution Employer-sponsored plans Pensions Retirees