Many Americans At Risk of Retiring With a Lower Standard of Living
Depending on the household, Americans face a “staggering” national retirement savings shortfall that’s between $6.8 and $14 trillion. That was the message New York State Comptroller Thomas P. DiNapoli delivered during a June 17 Retirement Summit at The New School’s Schwartz Center for Economic Policy Analysis. As Comptroller DiNapoli notes in this video, retirement insecurity is among the most important and pressing social and economic challenges Americans now face.
The New York State Common Retirement Fund, now valued at $176.2 billion, is one of the best funded State retirement plans in the country. At the summit, Comptroller DiNapoli reiterated that well-funded and well-managed defined benefit plans like those of the New York State & Local Retirement System are affordable and sustainable for the long term and serve as an example of how a good pension plan can work, and not just for public employees. Americans nonetheless face what he calls a “staggering” crisis of retirement insecurity.
Retirement Statistics Tell The Story
Comptroller DiNapoli pointed out the following sobering statistics:
- The number of private sector employees who have a defined benefit pension plan declined from 38 percent in 1980 to 14 percent in 2010;
- Close to 50 percent of the 79 million baby boomers – about 34 million men and women – are at risk of not being able to maintain their living standards in retirement;
- An average working-age household has only $3,000 saved for retirement, and 38 million working-age households – a full 45 percent of all households in America — do not own any retirement account assets, whether in an employer-sponsored 401 (k) type plan or an Individual Retirement Account;
- In New York City alone, a full 74 percent of low-income earners making $30,000 or less have no retirement plans.
How to Address A Complex and Growing Problem?
According to the Comptroller, though recently proposed initiatives, such as Senator Tom Harkin’s Retirement Fund s Act and President Barack Obama’s MyRA, are encouraging, it’s unlikely that any comprehensive federal legislation is going to be passed anytime soon. Comptroller DiNapoli believes that any proposed solution to this problem, whether at the state or federal level, must include a vehicle that provides ease of enrollment, protects principal, has low cost fees and provides for some level of guaranteed income in retirement. “The one thing we can’t do,” he stressed, “is stand still.”