PLANSPONSOR - October/November 2018 - 25

A Middle-Class Nightmare
DIANE Oakley, executive director for the
National Institute on Retirement Security
(NIRS), says her organization's research
found 85% of individuals are concerned
about retirement-55% of those being
very concerned. " Individuals want to know
'How am I doing?' " she says.
Therefore, the NIRS looked at U.S.
households to see whether Americans are
on track for retirement security. Its method
was to analyze data from the U.S. Census
Bureau's Survey of Income and Program
Participation (SIPP), released in 2016 and
2017. For the universe of working-age
households, headed by someone ages 21
through 64, the research " analyzed workplace
retirement plan coverage, account
ownership and savings as a percentage of
income, and estimated [how many] workers
meet financial industry recommended
benchmarks for retirement savings. "
The findings indicate that, among all
working Americans, the median retirement
account balance is zero. Further
findings were that 59.3%, or 100 million
Americans, own no assets in a workplace
retirement plan, individual retirement
account (IRA) or pension.
Expanding income inequality widens
the gap in retirement account ownership.
Workers in the top income quartile are
five times more likely to have retirement
accounts than workers in the lowest quartile.
Those with retirement accounts have
more than three times the annual income
of individuals with no accounts. And
nearly nine out of 10 households in the top
income quartile have retirement accounts,
compared with only one out of four households
in the lowest income quartile.
By early 2000, Oakley says, the landscape
had reached a high of 61.9% of
employees having access to an employersponsored
retirement plan. " But since
then, we've been through two recessions, "
she points out. Now, 52% of employees
Nearly 60% of Workers Have No Retirement Plan Savings
Retirement account ownership, by age, 2013
n n n n n n n n n n n n n n n
Have retirement account
59.3%
40.7%
Overall
n n n n n n n n n n n n n n n
Have no retirement account
72.5%
27.5% 44.5% 48.0% 48.7%
55.5%
52.0% 51.3%
Ages
Ages
21 - 34
35 - 44
Ages
45 - 54
Typical Pre-Retiree Has Less Than 8% of His Annual
Income Saved in a Retirement Account
Median ratio of retirement weath among working-age
individuals, by age group, 2013
Age of Head of Household*
Median ratio
Retirement account
balance to income
Net worth to income
21 - 34
0.00
0.93
35 - 44
0.00
0.70
45 - 54
0.04
1.56
*Universe is working individuals ages 21 - 64
Source: NIRS, " Retirement in America: Out of Reach for Working Americans? "
have access to an employer-sponsored plan.
" Retirement is in peril for most
working-class Americans, " Oakley says.
" When all working individuals are considered,
not just the minority with retirement
accounts, the typical person has zero saved
for retirement. The American dream of
a modest retirement after a lifetime of
work is now a middle-class nightmare.
Even among workers who had savings in
retirement accounts, the typical worker
had an account balance of $40,000. "
Families need to save more, and many
will work longer, but, NIRS contends, they
cannot fill the gap alone; they need help
from employers and policymakers. There
is a need to strengthen Social Security,
improve low- and middle-wage workers'
access to a work-related plan, and help lowwage
workers save. -Lee Barney
PLANSPONSOR.com October-November 2018 25
55 - 64
0.08
2.96
Ages
55 - 64
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