|Retirement Crisis Worse Than We Thought|
New research finds the magnitude of the retirement savings shortfall is staggering. For all working-age families, typical households have only a few thousand dollars saved for retirement.
NEW STUDY: RETIREMENT CRISIS WORSE THAN WE THOUGHT
Typical Working-Age Household Has $3,000 Saved for Retirement; Retirement Underfunding Ranges from $6.8 to $14 Trillion
Webinar on Thursday, June 20, 2013 at 11 AM ET
WASHINGTON, D.C., JUNE 20, 2013 – A new research report calculates that the magnitude of the retirement savings shortfall is staggering. When all working-age families are counted, the typical family has only a few thousand dollars saved for retirement. Four out of five working families have retirement savings less than one times their annual income. Because of this dangerously low level of savings, the U.S. retirement savings deficit is between $6.8 and $14.0 trillion, depending on the household assets counted.
These findings are contained in a new research report, The Retirement Savings Crisis: Is it Worse Than We Think?, issued today by the National Institute on Retirement Security (NIRS ). The full study is available here. A webinar to review the findings is scheduled for Thursday, June 20, 2013 at 11 AM ET. Register here or at https://www2.gotomeeting.com/register/605030506.
“We wanted to broadly examine how American households are faring in relation to retirement savings targets recommended by some financial services firms,” said Nari Rhee, report author and NIRS manager of research. “We used the Federal Reserve’s Survey of Consumer Finances to analyze retirement plan participation, savings, and overall assets of all U.S. households age 25 to 64, not just those with retirement account assets. This is important because some 45 percent, or 38 million working-age households, do not have any retirement account assets.”
Rhee added, “Our findings confirm that the American Dream of retiring comfortably after a lifetime of work will be impossible for many. Based on 401(k)–type account and IRA balances alone, some 92 percent of working households do not meet conservative retirement savings targets for their age and income. Even when counting their entire net worth, 65 percent still fall short.”
Diane Oakley, NIRS executive director said, “Two recessions and a prolonged economic recovery have made a difficult retirement outlook even worse. Employers have dialed back on workplace retirement plans, while many households struggle to save as they cope with higher living expenses and stagnant wages. Left unaddressed, the twin challenges of low access and low savings likely will result in grave consequences. We can expect substantial increases in public assistance costs, and even greater demands on strained families and social service organizations to help older Americans who just can’t make it on their own.”
Oakley added, “The data is grim, but I want to be as optimistic as the kindergarten teacher who tells students they ‘need improvement.’ Retirement policy can improve with reforms in three areas to help all Americans and encourage greater savings: 1) strengthen Social Security; 2) expand low- and middle-wage workers’ access to retirement savings via payroll; and 3) expand the incentives of the existing Saver’s Credit.”
The report key findings are as follows:
The full report is available here and at http://www.nirsonline.org.
The National Institute on Retirement Security is a non-profit organization established to contribute to informed policymaking by fostering a deep understanding of the value of retirement security to employees, employers, and the economy through national research and education programs. Located in Washington, D.C., NIRS has a diverse membership of organizations interested in retirement including financial services firms, employee benefit plans, trade associations, and other retirement service providers.
kkenneally at nirsonline.org