Those who continue to doubt that the country is facing a retirement crisis are going to have to overcome the Employee Benefit Research Institute’s latest daunting estimate, which puts the aggregate retirement shortfall at $4.13 trillion.

And that’s the favorable figure, which assumes politicians are able to strike a deal to shore up Social Security before the trust fund’s projected depletion, in 2033.

Variations in readiness vary by demographic, of course. For those early baby boomers on the verge of retirement, the savings deficit for married households is $19,304 (per individual), $33,778 for single males and $62,734 for single females, according to EBRI’s figures.

The organization’s new analysis builds off earlier research, which used proprietary modeling to estimate the probability of households likely to not run short of money in retirement.

Half of the simulated life paths in the study show a functional level of funding for retirement.

But when healthy savers are taken out of the mix, the average shortfall for underfunded boomers goes up, dramatically. Discounting healthy savers, early boomer married couples’ average deficit is more than $71,000 per individual.

Gen Xers are better situated, mostly because they have more time to contribute to their 401(k)s.

For those with 20 years of future eligibility ahead of them, the shortfall is only about $16,000. The deficit goes up as years of access to plans goes down. Gen Xers expected to be without access to a 401(k) plan for the remainder of their working careers are expected to be $78,000 short in retirement.

Predictably, longevity risk and rising healthcare costs are big problems for savers. To illustrate this, the study looked at shortfalls when estimated costs of nursing homes and health care are removed from simulations. When removed, the overall shortfall drops by 74 percent.

Those expected to live the longest have an average deficit 15 times greater than those who will die earlier in retirement.

The study estimated the value of Social Security in two ways. In one simulation, the benefit was eliminated, pushing the overall deficit up to $7.87 trillion.

In a more likely scenario, reduced benefits between 22 and 27 percent, beginning in 2033, push the average savings deficit for Gen Xers up by 15 percent.

Instant Insights /

US facing $4 trillion retirement shortfall, EBRI says

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