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A Typical Working-Age Household Has Only $3,000 in Retirement Account Assets; A Typical Near-Retirement Household Has Only $12,000 - By head of household age group


Retirement News

Looming Retirement Crisis in U.S. Prompts Senator to Announce Bill for Secure Retirement

Average family has $3,000 retirement fund says new study  by National Institute on Retirement Security; Sen. Harking wants ‘secure source of income for life’

By Tucker Sutherland, editor,

June 21, 2013 – With millions of retired senior citizens struggling to make ends meet, there appears to be millions more that will soon join them in battling to stay out of poverty in their final years. A report released yesterday showing the average family has just $3,000 in retirement savings prompted Senator Tom Harking (D-IA) to announce he will offer a bill “to give every American access to a retirement fund that will give people a secure source of income for life.”

The research report calculates that the magnitude of the retirement savings shortfall is staggering. When all working-age families are counted, the typical family has only a few thousand dollars saved for retirement.

From AARP Blog

Do It Like the Aussies – Make Retirement Savings Mandatory

Retiring in Australia appears to be much more pleasurable than in the United States — and it has nothing to do with gathering around the barbie and watching marsupials romp.

Most workers who retire in the land Down Under apparently don’t have to worry so much about outliving their savings. That’s because about 90 percent of the workforce has a retirement savings account, and contributing to it is mandatory. Yep, you read that correctly. Most workers sock away at least 9 percent of their paycheck each week. More at AARP Blog

Four out of five working families have retirement savings less than one times their annual income. Because of this dangerously low level of savings, the U.S. retirement savings deficit is between $6.8 and $14.0 trillion, depending on the household assets counted.

The report, The Retirement Savings Crisis: Is it Worse Than We Think?, was issued Thursday by the National Institute on Retirement Security (NIRS ).

Harkin (D-IA), Chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, said in a statement, “The findings of this report show that the chance of a secure retirement for the average American worker is growing fainter by the day.”

Hearing by Sen. Harkin on Retirement Needs

Video, testimony

He added, “My USA Retirement Fund proposal would enable workers to save for a secure retirement even as they move jobs, making it easier to plan for the future. We know that we can increase savings rates dramatically by ensuring that everyone has easy, automatic access to a retirement plan, and today’s report shows how critical it is that we take action.

“Unless we do something to help every American save for retirement, we will face an epidemic of senior poverty in decades to come.”

The key findings of The National Institute for Retirement Security according to the authors included:

   ● Account ownership rates are closely correlated with income and wealth. More than 38 million working-age households (45 percent) do not own any retirement account assets, whether in an employer-sponsored 401(k) type plan or an IRA.
   > Households that do own retirement accounts have significantly higher income and wealth - more than double the income and five times the non-retirement assets - than households that do not own a retirement account.

   ● The average working household has virtually no retirement savings. When all households are included— not just households with retirement accounts—the median retirement account balance is $3,000 for all working-age households and $12,000 for near-retirement households.

More from The National Institute on Retirement Security

New Study Finds Overwhelming Support for Action to Provide All Americans with Pensions

Feb. 26, 2013 – A new research report finds overwhelming support for Congressional action to provide all Americans with access to a new type of privately run pension plan. The research finds that Americans remain highly anxious about retirement, and see pensions as a way to improve retirement readiness. - Read more...

   > Two-thirds of working households age 55-64 with at least one earner have retirement savings less than one times their annual income, which is far below what they will need to maintain their standard of living in retirement.

   ● The collective retirement savings gap among working households age 25-64 ranges from $6.8 to $14 trillion, depending on the financial measure. A large majority of households fall short of conservative retirement savings targets for their age and income based on working until age 67.

   > Based on retirement account assets, 92 percent of working households do not meet targets. Under broader measures, most households still have insufficient assets: 90 percent fall short based on retirement account balances and estimated DB pension assets combined, 84 percent fall short based on total financial assets, and 65 percent fall short based on net worth.

   ● Public policy can play a critical role in putting all Americans on a path toward a secure retirement by strengthening Social Security, expanding access to low-cost, high quality retirement plans, and helping low-income workers and families save. Social Security, the primary edifice of retirement income security, could be strengthened to stabilize system financing and enhance benefits for vulnerable populations.

   > Access to workplace retirement plans could be expanded by making it easier for private employers to sponsor DB pensions, while national and state level proposals aim to ensure universal retirement plan coverage.

   > Expanding the Saver’s Credit and making it refundable could help boost the retirement savings of lower-income families.

 “We wanted to broadly examine how American households are faring in relation to retirement savings targets recommended by some financial services firms,” said Nari Rhee, report author and NIRS manager of research.


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“We used the Federal Reserve’s Survey of Consumer Finances to analyze retirement plan participation, savings, and overall assets of all U.S. households age 25 to 64, not just those with retirement account assets. This is important because some 45 percent, or 38 million working-age households, do not have any retirement account assets.”

Rhee added, “Our findings confirm that the American Dream of retiring comfortably after a lifetime of work will be impossible for many. Based on 401(k)–type account and IRA balances alone, some 92 percent of working households do not meet conservative retirement savings targets for their age and income. Even when counting their entire net worth, 65 percent still fall short.”

Diane Oakley, NIRS executive director said, “Two recessions and a prolonged economic recovery have made a difficult retirement outlook even worse. Employers have dialed back on workplace retirement plans, while many households struggle to save as they cope with higher living expenses and stagnant wages. Left unaddressed, the twin challenges of low access and low savings likely will result in grave consequences. We can expect substantial increases in public assistance costs, and even greater demands on strained families and social service organizations to help older Americans who just can’t make it on their own.”

Oakley added, “The data is grim, but I want to be as optimistic as the kindergarten teacher who tells students they ‘need improvement.’ Retirement policy can improve with reforms in three areas to help all Americans and encourage greater savings: 1) strengthen Social Security; 2) expand low- and middle-wage workers’ access to retirement savings via payroll; and 3) expand the incentives of the existing Saver’s Credit.”

   >> Download the full report in PDF here.

   >> Download the PowerPoint here.

   >> Download Data Charts here.

The National Institute on Retirement Security is a non-profit organization established to contribute to informed policymaking by fostering a deep understanding of the value of retirement security to employees, employers, and the economy through national research and education programs. Located in Washington, D.C., NIRS has a diverse membership of organizations interested in retirement including financial services firms, employee benefit plans, trade associations, and other retirement service providers.


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