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Economic Policy

Economic Policy Institute Study on the State of American Retirement

[Posted on 03/23/2016 at 1:35 PM]

A new study by the Economic Policy Institute demonstrates that most Americans have inadequate retirement savings--particularly women, minorities, single workers and low-income workers. The key findings are listed below:

From Retirement Inequality Chartbook | March 3, 2016
The State of American Retirement: How 401(k)s have failed most American workers
By Monique Morrissey

Summary of key findings1

  • Retirement wealth hasn’t grown quickly enough to keep pace with an aging population.
  • The shift from traditional pensions to individual savings has widened retirement gaps.
  • Workers’ retirement prospects are increasingly affected by economic downturns.
  • Family finances still haven’t recovered from the collapse of the housing bubble.
  • The growth in retirement inequality hasn’t been random. The rich have gotten richer and the poor have gotten poorer.
  • The gap in retirement readiness between workers with and without a college education has widened.
  • Single people and women face particular challenges. Nearly two-thirds of married couples had retirement savings accounts in 2013, compared with 42 percent of single women and 43 percent of single men. Single women are more vulnerable in retirement than single men because of lower lifetime earnings and longer life spans.
  • Most families have little or nothing saved for retirement, even those approaching retirement age, and nearly half have no retirement savings at all.


The trends exhibited in these figures paint a picture of increasingly inadequate savings and retirement income for successive generations of Americans—and growing disparities by income, race, ethnicity, education, and marital status. Women, who by some measures are narrowing gaps with men, remain much more vulnerable in retirement due to lower lifetime earnings and longer life expectancies.

Decades after the number of active participants in 401(k)-style plans edged out those in traditional pensions, 401(k)s are not delivering substantial income in retirement, and that income is not equally shared.

Retirement security has also been affected by changes in Social Security, notably the gradual increase in the normal retirement age and other benefit cuts implemented in 1983; by broader income and wealth trends, such as growing earnings inequality and the collapse of the stock and housing bubbles; and by other factors, such as trends in out-of-pocket medical costs. A description of these broader trends is outside the scope of this chartbook. However, we can assume that as the value of employer-based retirement plans is declining and retirement savings are growing more unequal, retirement security is declining and growing more unequal, since there is little evidence of countervailing trends.

The shift from pensions to account-type savings plans has been a disaster for lower-income, black, Hispanic, non-college-educated, and single workers, who together add up to a majority of the American population. But even among upper-income white college-educated married couples, many do not have adequate retirement savings or benefits. The evidence presented in this chartbook—that the retirement system does not work for most workers—underscores the importance of preserving and expanding Social Security, defending defined-benefit pensions for workers who have them, and seeking new solutions for those who do not.

Full report: The State of American Retirement

1Developed by a third party for the Athene Annuity & Life Company.

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