Even ‘top earners’ still might not be prepared for retirement

Still, the research shows that income goes only so far in determining the health of a person’s retirement savings. That balance hangs on many other factors, including whether or not your job offers you a 401(k), which assets your employer selects and if you took breaks from the workforce. (More than 40% of millennials don’t have access to a retirement plan through their job, according to Pew Trusts).

“There’s so much arbitrary stuff involved,” Ghilarducci said. “It’s not just whether you’re high-income, low-income or middle-income.”

Back in the 1980s, she said, 401(k) plans were framed as a comprehensive solution to the shortcomings of Social Security.

However, the researchers found that median retirement wealth falls 84% short of what people would accumulate if they saved 6% of every paycheck with a 50% employer match.

The authors recommend that lawmakers bolster Social Security and consider “guaranteed retirement accounts,” in which people save in low-fee accounts with modest returns and then are later paid out in regular installments.

“We’ve run the experiment for 40 years,” Ghilarducci said. “We pronounce it a failure.”

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