The Government Office of Accounting* (GAO) released a letter to the ranking member of the Senate Committee on the Budget on March 26, 2019. The letter, written by Charles A. Jeszeck Director of Education, Workforce, and Income Security Issues, lists statistics from a study conducted February to March 2019. The study, with a 95% confidence intervals, was compared to a Survey of Consumer Finances conducted in 2013.
A brief table** in the letter shared the following statistics. Households with “No Retirement Savings” dropped from 52% to 48%–a positive trend, but still disturbing that this many have nothing. “No retirement savings and no defined-benefit (DB) plan” maintained at 29%. “A DB plan but no retirement savings” dropped from 23% to 20%. “Retirement savings but no DB plan” increased from 23% to 26% (another positive movement). “Retirement savings and a DB plan” indicated 25% to 26% (however the letter specified that this change was “not statistically significant”.
This data confirms the assertions in my book 7 Reasons You May Not Get to Retire and How to Fix Them that almost half of the people will not benefit from 2 of the 5 traditional pillars of retirement: a pension (benefit-defined or poorly funded contribution-defined) pension, and savings. In addition to the two pillars mentioned above, many people will not be able to rely on the equity of a fully paid off mortgage or sufficient investments. Finally, few people maintain confidence in the viability of Social Security to last throughout their retirement.
This article does not address how the additional problem with skyrocketing medical costs for people over 65 years of age combined with decreasing health coverage and increasing life spans prevent the ability to retire. Adult children (over 55) frequently see their parents financial legacy–and their own financial resources–consumed by health costs not covered by inadequate insurance and medicare.
Forecasts of an emerging bubble of retirees rising to the surface in the next 5-15 years continue in publications. Yet, this report and other data indicate that when this bubble comes of age, financially they will not be able to retire. Most of us know people who retired and then had to go back to work due to financial obligations. Some by choice, but too many without a choice shackled by financial obligations they cannot meet.
** I apologize for not being able to insert a table into this article and having to put the data in paragraph form.