We’d say this qualifies as a “crisis.”
An analysis of U.S. Census Bureau data reveals that the median retirement account balance among all working individuals is $0.00 (you read it right).
The data also indicate that 57 percent, or more than 100 million, of working age individuals do not own any retirement account assets in an employer-sponsored 401k plan, individual account or pension.
Analysis finds that overall, four out of five working Americans have less than one year’s income saved in retirement accounts.
Also, 77 percent of Americans fall short of conservative retirement savings targets for their age based on working until age 67 even after counting an individual’s entire net worth—a generous measure of retirement savings.
Moreover, a large majority of working Americans cannot meet even a substantially reduced savings target, and growing income inequality widens the gap in retirement account ownership, the report claims.
Workers in the top income quartile are five times more likely to have retirement accounts than workers in the lowest income quartile.
And those individuals with retirement accounts have, on average, more than three times the annual income of individuals who do not own retirement accounts.
The findings are contained in a new report, Retirement in America | Out of Reach for Most Americans? from the National Institute on Retirement Security.
The retirement savings shortfall can be attributed to a multitude of factors and a breakdown of the nation’s retirement infrastructure.
“There is a massive retirement plan coverage gap among American workers, fewer workers have stable and secure pensions, 401(k)-style defined contribution (DC) individual accounts provide less savings and protection and jumps in the Social Security retirement age translate into lower retirement income,” according to the report.
“The facts and data are clear,” Diane Oakley, NIRS executive director, said in a statement. “Retirement is in peril for most working-class Americans. When all working individuals are considered—not just the minority with retirement accounts—the typical working American has zero, zilch, nothing saved for retirement.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
