Report Finds Americans Are without Retirement Savings Plans or Pensions

 Posted on September 10,2015 in Estate Planning

The U.S. Census Bureau estimates that as the baby boomer generation ages into retirement, the age 65-and-older population will grow over 50 percent over the next 15 years. However, according to a new report recently released by the U.S. Government Accountability Office (GAO), a good majority of that population will not have the financial resources needed for retirement.

The GAO used data from the 2013 Survey of Consumer Finances, a survey sponsored by the Federal Reserve Board and the Department of the Treasury, to compile their report.

Per the GAO report, more than half of Americans aged 55 years or older do not have any type of retirement savings account, such as a 401(k) or Individual Retirement Accounts (IRA). Approximately 20 percent do have some type of pension which they will be able to draw from during retirement; however, another 30 percent will be left without retirement savings or pension.  

For those people with retirement savings accounts, the median amounts of those accounts were $104,000 for people who were under 65 years of age. For those over 65, the median amount was $148,000.

The GAO report points out that pension plans are not as beneficial as they were for previous generations. For example, in 1975, the majority of workers had jobs which offered pension plans providing a lifetime defined benefit. A defined benefit (DB) amount is one that is based on an employee's years of service and their final salary. Over the years, lifetime defined benefit pension plans have been replaced by defined contribution (DC) plans, such as IRAs and 401(k) plans. And today, twice as many workers only have access to DC plans compared to the number of employees who have the benefit of DB plans.

The GAO discovered that approximately 40 percent of older Americans between the ages of 65 and 74 depend on their Social Security benefit for the majority of their household income. However, for those senior citizens who are 75 and older, that percentage shoots up to 61 percent. Currently, the average monthly Social Security benefit check is $1,287.00.

As this report demonstrates, it is essential for people to have a solid estate plan in place to ensure financial security when they retire. Contact an experienced DuPage County estate planning attorney today for more details.   

Sources:

http://www.federalreserve.gov/econresdata/scf/scfindex.htm

http://www.gao.gov/products/GAO-15-419

http://www.ssa.gov/policy/docs/ssb/v69n3/v69n3p1.html

http://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/