Retirement Is In Peril For Most Working Class Americans, Warns New Report

Retirement is in peril for most working-class Americans cautions a new report by the National Institute on Retirement Security, a Washington think tank.

“The American dream of a modest retirement after a lifetime of work now is a middle-class nightmare,” warns the study’s author, NIRS Executive Director Diane Oakley.

The report contends nearly four out of five working Americans are falling short of conservative retirement savings targets.

Roughly the same number have less than one year’s income saved in retirement accounts, according to the study.

That “less than one year” is actually nothing for close to three out of five workers.

“57 percent (more than 100 million) of working age individuals do not own any retirement account assets in an employer-sponsored 401(k)-type plan, individual account or pension,” the think tank emphasizes.

Oakley says causes of the retirement savings shortfalls include fewer workers having stable and secure pensions and the replacement of workplace pensions with 401(k)-style defined contribution accounts which provide less savings and protection.

The report claims total retirement savings are still suffering from aftershocks of the Recession.

“The economic downturn triggered a decline in total contributions to defined contribution retirement accounts as many employers stopped matching employee contributions for a time pushing total contributions below 2008 levels,” the report explains.

In the alert, NIRS says while the typical American needs 85 percent of their working income to maintain their standard of living in retirement, Social Security provides only 35 percent.

“This leaves a retirement income gap equal to 50 percent of pre-retirement earnings that must be filled through other means,” the study points out.

To help fill the retirement savings gap, the retirement security think tank says Social Security should be strengthened and access should be expanded to low-cost, high-quality defined contribution plans, defined benefit pensions and hybrid plans.

To expand access to pensions, the group is urging Congress to lure more employers into offering them by making required contributions more predictable.

In another federal measure that could help reduce the savings gap, NIRS says tax credits should be improved to help low and moderate income workers save for retirement.

To see the full study, click on: https://bit.ly/2xr0So3 .

Source: Forbes

2018-09-24T11:16:21+00:00