People are always amazed when I tell them how little American workers have managed to save for retirement—and, thus, why the Social Security system is so important.
According to a new report from the Economic Policy Institute, on the state of retirement for American workers, the numbers are sobering.
Remember from yesterday that nearly half of American working families have no retirement account savings at all. That makes median (fiftieth-percentile) values low for all age groups, ranging from $480 for families in their mid-30s to $17,000 for families approaching retirement in 2013. 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.
Of course, mean retirement savings are much higher than the median. Yet, while average retirement account savings grew somewhat between 2001 and 2013, this was mostly due to the aging of the large baby-boomer cohort, as older families have had more time to accumulate savings. And, for those baby-boomers, their retirement savings had declined on average more than 20 percent between 2007 and 2013.
In fact, rather than declines (or, for some groups, stagnation), we should be seeing rising retirement account balances at all ages to offset declines in defined-benefit pension coverage and Social Security cuts.
And we’re not.