The 65 and older population will grow to about 74 million by 2030, more than 50 percent larger than in 2015, and representing more than 20 percent of the projected total U.S. population.
The title of a new United States Government Accountability Office report is a spoiler: “Most Households Approaching Retirement Have Low Savings.”
According to the report, half (52 percent) of households ages 55 and older have no retirement savings, such as in a 401(k) plan or an Individual Retirement Account. The GAO analysis of the 2013 Survey of Consumer Finances finds that many older households without retirement savings have few other financial resources such as a defined benefit plan or non-retirement savings on which to draw.
For example, the report states, nearly 30 percent of households ages 55 and up have neither retirement savings nor a DB plan, which would typically provide a monthly payment for life.
Retirement income generally comes from several sources, including Social Security benefits, which are paid monthly until death and adjust annually for cost-of-living increases. About four-in-ten households ages 65-74 get most of their income from Social Security, the report states. Other retirement income comes from employment-based DB plan payments, savings in a retirement plan such as a 401(k), and other sources, including wages, home equity and non-retirement savings.
Among households with some retirement savings, the median amount is about $104,000 for Baby Boomer households ages 55-64 and $148,000 for household ages 65-74. Social Security provides most of the income for about half of senior households ages 65 and older.
The Census Bureau forecasts that the 65 and older population will grow to about 74 million by 2030, more than 50 percent larger than in 2015, and representing more than 20 percent of the projected total U.S. population, the GAO report notes. Their retirement security will be impacted by a shift in private sector pension coverage from DB plans to defined contribution plans, which shifts responsibility for retirement savings from the employer to the employee, as well as longer life expectancies and concerns about the viability of Social Security.
Running out of retirement funds is the primary financial fear of Affluent investors surveyed by Spectrem Group, while not saving enough for retirement is the biggest financial regret.