The U.S. retirement savings deficit is between $6.8 to $14 trillion
The typical American working age family has only a few thousand dollars in retirement savings, while 45 percent do not have any retirement account assets, according to a new report issued by the National Institute on Retirement.
“Our findings confirm that the American Dream of retiring comfortably after a lifetime of work will be impossible for many,” said Nari Rhee, author of the report, in a statement.
A substantial majority of households fall short of conservative retirement savings targets for their age and income based on working until age 67, the report finds. The median retirement account balance for all households—not just those with retirement accounts—is $3,000 for all working age households and $12,000 for near retirement households. Two-thirds of baby boomer age working households (55-64) with at least one earner have retirement savings less than one times their annual income, which is far below the benchmark that experts estimate retirees will need to maintain their standard of living.
In the current economic retirement, the report states, some financial experts have increased the recommended contribution rate from 10 percent of pay to 15 percent to reach the target estimate in retirement assets needed to maintain a retiree’s standard of living. Nine-in-ten (92 percent) of working households do not meet retirement savings targets. The collective retirement savings gap among working households ages 25-64 ranges from $6.8 to $14 trillion.
Retirement anxiety, the report states, is in part because of the shift from traditional defined benefit programs, which provided a stable and steady source of retirement income that was managed by professionals to defined contribution individual investment accounts, such as a 401(k). These plans put the onus of contributing to their account on individuals who are more likely to not have the investment acumen of professional advisors.
Wealthier households are more likely to have retirement accounts than lower income households (nearly nine-in-ten of the former vs. one out of four of the latter).
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.