The average working household has virtually no retirement savings, finds a new study exploring whether the retirement savings crisis is actually worse than what people think.
“Americans are highly anxious about their retirement security, and for good reason,” says the National Institute on Retirement Security’s 2013 report.
Looking at all households collectively, rather than just those with retirement accounts, the median retirement account balance is $3,000 for all working-age households and $12,000 for near-retirement households, according to the report.
“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 report finds.
This amounts to a collective retirement savings gap among working households age 25-64 that ranges between $6.8 trillion—to $14 trillion, depending on how it’s measured.
“A large majority of households fall short of conservative retirement savings targets for their age and income based on working until age 67,” the report finds. “Based on retirement account assets, 92 percent of working households do not meet targets.”
Public policy can play a “critical” role, the researchers conclude. Strengthening Social Security, expanding access to low-cost, high-quality retirement plans, and helping low-income households save are all ways to direct Americans toward a secure retirement.
“If the U.S. were to be given a grade for its retirement readiness today, it would be a ‘Needs Improvement,'” concludes the National Institute on Retirement Security. “…Acting sooner rather than later will greatly improve our future retirement security.”
Written by Alyssa Gerace