The American nest egg is facing financial extinction. Aging workers who thought they could relax in retirement face unprecedented economic stressors, according to new analysis of retirement wealth.
Data from Economic Policy Institute (EPI) reveals retirement wealth is turning into retirement poverty for a growing portion of working households. The labor-focused think tank finds that “retirement wealth has not grown fast enough to keep pace with an aging population and other changes.” While retirement wealth has risen in absolute terms since the 1990s, EPI observes that the growth trend has lagged behind changes in the aging population’s size and needs. Instability has generally grown due to a shift from steadier defined-benefit plans to more financially volatile defined-contribution savings accounts. Social security cutbacks have further eroded assets, bringing “increased longevity risks and investment risks.” When sorted by age group, retirement funds have stagnated or declined overall, with an especially steep drop among 56 to 61 year-olds, from nearly $212,000 in 2007 to less than $164,000 in 2013.
Across age groups, most families, according to EPI, “have little to no retirement savings,” and many of those headed by workers approaching retirement age have nothing to fall back on. Researchers found that “For most age groups, median account balances in 2013 were less than half their pre-recession peak and lower than at the start of the new millennium.” The portion of households of 32 to 61 year-olds participating in any kind of retirement plan has ebbed.