How many more studies do we need telling us how bad America's retirement crisis is?


One of the latest, "The Retirement Savings Crisis: Is it Worse than We Think?" conducted by the National Institute of Retirement Security, seems to answer its own question. Using 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, the report found that four out of five working families have saved less than 1 percent of their income for retirement.


Among the report's key findings:

  • The lower a household's income, the less likely it is to have a retirement account of any kind, either employer-sponsored or an IRA. It's the households with considerably higher income that have accumulated at least some retirement savings.
  • The average family, however, is in deep trouble when it comes to retirement. The median retirement account balance for all working-age households is a mere $3,000 and only $12,000 for working households age 55-64 with at least one earner, far below what they'll need to retire in comfort.
  • The collective retirement savings gap among working households age 25-64 ranges from $6.8 to $14 trillion, depending on the financial measure. A large majority of households fall short of conservative retirement savings targets for their age and income based on working until age 67. Based on retirement account assets, 92 percent of working households do not meet targets. Under broader measures, most households still have insufficient assets: 90 percent fall short based on retirement account balances and estimated DB pension assets combined, 84 percent fall short based on total financial assets, and 65 percent fall short based on net worth.
  • Public policy can play a critical role in putting all Americans on a path toward a secure retirement by strengthening Social Security, expanding access to low-cost, high quality retirement plans, and helping low-income workers and families save. Social Security, the primary edifice of retirement income security, could be strengthened to stabilize system financing and enhance benefits for vulnerable populations. Access to workplace retirement plans could be expanded by making it easier for private employers to sponsor DB pensions, while national and state level proposals aim to ensure universal retirement plan coverage. Finally, expanding the Saver's Credit and making it refundable could help boost the retirement savings of lower-income families.

"Two recessions and a prolonged economic recovery have made a difficult retirement outlook even worse," said NIRS Executive Director Diane Oakley. "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."

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