Half of Americans Facing Retirement With No Savings

For Many 65 and Older, It's Social Security or Nothing

Retired Rich
Half of Americans Nearing Retirement With No Savings. Sharper Image/Getty Images

Over half of Americans nearing what should be their “golden” years have little or no retirement savings, according to the Government Accountability Office (GAO).

The GAO’s analysis, requested by 2016 presidential candidate Sen. Bernie Sanders (I-Vermont), 52% of U.S. households headed persons 55 and older have no retirement savings, such as a 401(k) plan or an IRA. In addition, Social Security benefits alone represent most of the retirement income for about 50% of households headed by persons age 65 and older.

Among the 48% of households age 55 and older that do have some retirement savings, the median amount of those savings is about $109,000 – an inflation-protected annuity worth only about $405 per month for a 65-year old.

Households with adequate retirement savings are more likely to have additional income sources, such as lifetime income from a “defined benefit” employer-provided pension or retirement plan. However, noted the GAO, nearly 30% of all U.S. households nearing retirement have neither savings nor a pension plan. While about 91 million workers have individual contribution retirement plans like a 401(k), such plans do not ensure a dependable lifetime income.

Social Security currently pays retirees an average of $1,287 per month, and “Social Security remains the largest component of household income in retirement, making up an average of 52 percent of household income for those ages 65 and older,” according to the GAO’s report.

Even scarier, households headed by persons 75 and older currently get 61% of their income from Social Security.

The Social Security Board of Trustees has projected that unless Congress acts to change the system, the trust fund used to pay retirement benefits will become depleted by 2042, leaving Social Security unable to pay full benefits to retiring workers.

Ominously, America is aging fast. More than 10,000 Americans a day will become eligible for Social Security benefits over the next 20 years, according to the U.S. Census Bureau, which also reports that Baby Boomers, persons born from 1946 through 1964, are the fastest growing segment of the U.S. population.

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“This report makes it clear that there is a retirement crisis in America today,” Sen. Sanders said in a statement. “At a time when half of all older workers have no retirement savings, we need to expand, not cut, Social Security benefits so that every American can retire with dignity.”

“At a time of massive wealth and income inequality, we have got to demand that the richest people in this country pay their fair share,” he added.

Sen. Sanders has long supported increasing taxes paid by wealthy people, rather than increasing payroll taxes paid by workers, as a way of protecting Social Security.

According to studies and surveys analyzed by the GAO, from one-third to two-thirds of American workers are at risk of not being able to maintain their pre-retirement standard of living in retirement.

The surveys show that, compared to current retirees, workers age 55 and older expect to delay retirement, and a higher percentage plan to have to continue working during retirement.

However, noted the GAO, one survey found that about half of retirees said they retired earlier than planned due to health problems, being laid-off, forced to retire, or other workplace changes, suggesting that many workers may be overestimating their future retirement income and savings.

The GAO also found that people age 55-64 are less confident about their finances in retirement than those who are already age 65 or older.

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