Still Behind, But Improving

Today, American households headed by individuals between the ages of 35 and 64 are running $3.83 trillion short of the amount they need to safely carry them through their post-working life, according to new data by the Employee Benefit Research Institute.

However, the last time EBRI ran the numbers, in 2014, those families were $4.44 trillion behind. So in a “glass half full” kind of way, that can be considered a significant improvement.

Across all generations, the savings shortfalls have narrowed. People between the ages of 45 and 49 are currently $43,000 behind on their retirement savings, compared with $49,740 in 2014. People in their late 30s are now $49,182 behind where they should be, instead of $63,407.

According to the study, every group under age 60 is better than they were five years ago. (EBRI uses a complex model on U.S. households to arrive at these numbers, analyzing the behavior of some 50 million retirement participants and simulating more than 1,000 different life outcomes for each retiree.)

The study cites the movement at companies to auto-enroll employees in their 401(k) plans as a driver for much of the improvements, and the stock market rally has also helped.

Further progress in strengthening retirement savings is also being aided by some states that have started to offer individual retirement accounts to employees who don’t have access to a 401(k). The early impacts are already promising, as in Oregon, where the number of people with account balances in the state plan swelled to 21,743 last year, compared with 1,142 in 2017.

To be sure, while Americans are less behind than they were in 2014, they’re still not where they need to be. But any positive step in the right direction should be encouraged.