By: Eric Galatas, Public News Service
Nearly half of U.S. families have no retirement savings, according to a new Economic Policy Institute report. And the median balance for families that do have savings is far from what they’ll need.
The report said families in their mid-30s have just $1,000 socked away. And families that were approaching retirement age in 2016 had a total of just $21,000.
Monique Morrissey is an economist at the Economic Policy Institute and the report’s lead author.
“Even though we’ve had a strong recovery from the recession, most households are still woefully unprepared for retirement,” Morrissey said. “And retirement has become much more unequal.”
Morrissey said expanding Social Security benefits and ensuring all workers receive employer contributions, for example through a proposed national Guaranteed Retirement Account, would help more people avoid working late into their sunset years. Critics of expanding Social Security have argued the program was never meant to be a retirement plan.
Morrissey said she disagrees, and noted the architects of the program launched just after the Great Depression wanted it to be sufficient for retirement. She added that Social Security has been the only stable leg of the so-called three-legged stool of retirement – which includes employer contributions and savings – because just half of U.S. workers have a pension, which has also become much less reliable in the era of the 401(k).
“People are not saving any less or any more than they did before. But the problem is they need to be saving more, because of many other factors including the fact that they don’t have pensions anymore,” she said.
Due primarily to lack of access to employer pensions and jobs that pay a living wage, only 35% of Hispanic families and 41% of black families have retirement savings. By contrast, 68% of white families have retirement accounts. The report also found nearly 80% of all tax subsidies for retirement funds go to families earning more than $100,000 a year.