Retirement in America

Today, retirement security is a struggle for many Americans. The data indicate that many Americans, particularly middle-class workers, are falling short when it comes to saving enough money for a financially secure retirement.

Retirement security has become a challenge because the traditional “three-legged retirement stool” — a pension, individual savings, and Social Security — now is elusive to most workers. Together, these three legs of the retirement stool provided Americans with financial stability in old age, reduced poverty among seniors, and ensured financial dignity after a lifetime of work.

In addition, a few key trends indicate that it will take increased efforts to ensure working Americans have retirement security in the future: longer life spans, rising costs (particularly for healthcare), stagnant wages, and declining birth rates.

Another major problem is that retirement plan coverage is not universal in the U.S. The share of Americans lacking workplace retirement plans has remained stubbornly high for decades, and it’s a chronic impediment to financial security for many American workers. Almost half of private-sector employees ages 18 to 64, or 57 million Americans, do not participate in a retirement plan at work. This is important because payroll deduction is the key to helping households build retirement savings.

Another challenge to retirement security is that many private-sector employers that offer retirement plans have largely shifted both the costs and risks of saving for retirement onto workers by replacing pensions with 401(k) plans.

Amid all of these significant changes to the nation’s retirement infrastructure, most Americans are not saving enough to be self-sufficient in retirement. As a result, most Americans are anxious about their ability to support themselves in retirement. 

While Congress has taken some bi-partisan steps to improve Americans’ retirement prospects, much work remains to ensure Americans can be self-sufficient in their elder years.