News from the retirement front once again is showing its dark side, with the number of families with employment-based retirement plans falling to under 50 percent.
Even though the median balances in plans has risen, thanks to a strong stock market, the fact that fewer families have accounts does not bode well for their eventual retirement plans.
Research from the Employee Benefit Research Institute reviewed data from the 2013 Survey of Consumer Finances, the Federal Reserve Board's triennial survey of wealth. Its findings were not heartening. Retirement plan ownership from a current employer fell from 2010 to 2013, continuing a downward trend that the SCF had recorded between its 2007 and 2010 surveys.
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While the percentage of families with IRAs or Keoghs was pretty much the same from 2010 (28 percent) to 2013 (28.1 percent), the percentage of families with an individual account retirement plan from a current employer or a previous employer or an IRA/Keogh dropped from 50.4 percent in 2010 to 48.2 percent in 2013.
The median value of families' accounts, however, increased — according to the SCF, probably because of strong stock market performance. EBRI said that in 1992 the median value was $22,992; it climbed to $38,608 in 2001, and in 2013 increased to $59,000.
EBRI also said that, among families that had them, individual retirement account assets accounted for a strong majority of families' financial assets — 70.3 percent at the median. The report pointed out that, with the decline in defined benefit plans, independent account retirement plans are becoming increasingly important as a means for private-sector workers to build up retirement savings. "Consequently, the amount of assets currently accumulated in these accounts provides an indication of how prepared — or unprepared — workers will be to supplement any Social Security benefits they will receive in retirement."
According to the EBRI's Retirement Readiness Ratings, 41 to 43 percent of Americans are at risk of running out of money in retirement.
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