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Retirement Planning > Saving for Retirement

Half of workers risk saving too little

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Thinking of retiring? Better hope you’re not among the more than 50 percent of U.S. households that haven’t managed to squirrel away enough to do so — or that your financial situation deteriorates and endangers your plans. 

While that assessment may be contested by some as an exaggeration, a new report from the liberal think tank Center for American Progress says it’s no more than a “middle-of-the-road” estimate based on its review of studies from a range of government, academic and private-sector groups. 

CAP researchers added that even the most optimistic of the studies it examined found that almost a quarter of retirees will run out of money.  

And the situation is only going to get worse, CAP said. Federal Reserve data indicate that approximately 31 percent of Americans have no retirement savings and no access to defined benefit plans, including 19 percent of people aged 55-64. 

Researchers also found that, of the 65 percent of workers in the private sector who have access to a retirement plan at work, just 48 percent actually participated in that plan in 2014. 

In addition, analyses that looked back long range indicate that the share of private-sector workers with access to a retirement plan has fallen below where it was in the late 1980s. 

“The biggest problems are that far too many people don’t have access to a private-sector retirement plan, and secondly, the plans they do have access to aren’t very good,” David Madland, managing director of CAP’s economic policy team, said in a statement. 

Costs that rise and wages that don’t have added to the problems arising out of putting the responsibility for retirement squarely on the individual, CAP said. And that makes the retirement crisis “almost unsolvable,” Madland said, adding, “And each generation gets worse.” 

CAP data indicate that, as of 2013, 67.7 percent of all retirement assets were held by the top 20 percent of working-age households by income. The bottom 50 percent of households, on the other hand, held just 7.4 percent of assets. 

The CAP study also found that not only would households have to “significantly reduce their standards of living in retirement,” but the situation “will also place greater stress on the government and other social sources such as charities.”