A new GAO analysis finds
that among households with members aged 55 or older, nearly 29 percent have
neither retirement savings nor a traditional pension plan. Even among
those who do have retirement savings, their nest eggs are small. The agency
found the median amount of those savings is about $104,000 for households with
members between 55 and 64 years old and $148,000 for households with members 65
to 74 years old. That's equivalent to an inflation-protected annuity of $310
and $649 per month, respectively, according to the GAO.
Social Security remains a fundamental part of most
Americans' retirement plans, with benefits providing most of the income for
about half of households age 65 and older, according to the GAO. The
agency studied the level of Americans' retirement savings at the request of Sen.
Bernie Sanders of Vermont, an independent who is seeking the Democratic
nomination in the 2016 presidential election and is also the ranking Democratic
member on the Senate's subcommittee on primary health and retirement security.
Estimates about the size and scope of the retirement savings
problem vary widely, the GAO found. In addition to examining the Survey of
Consumer Finances, it reviewed nine studies conducted between 2006 and
2015 by a variety of organizations, including academics, benefits consultant
Aon Hewitt, the Employee Benefit Research Institute (EBRI) and the Investment
Company Institute. Based on these reports, it concluded that one-third to
two-thirds of workers are at risk of falling short of their retirement savings
targets, in part because of the range of assumptions about how much income is
required in retirement.
The research that the GAO examined consistently showed that
people aged 55 to 64 are less confident about their retirement and plan to work
longer to afford retirement. However, a 2012 study by the EBRI found that about half of retirees
said they retired earlier than planned because of health problems, changes at
their workplace or having to care for a spouse or another family member. This
suggests that many workers may be overestimating their future retirement income
and savings.
Reports like those and the GAO analysis should serve as a
wake-up call about the lack of Americans' retirement savings, said Catherine
Collinson, president of the Transamerica Center for Retirement Studies. Transamerica's
retirement research, which wasn't included in the GAO's review, doesn't give
board projections about America's retirement readiness because retirement is
"a very personal question," she said. But Collinson stressed the
need for more people to calculate their projected retirement needs and to plan
ahead accordingly.
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