51%: An ominous number
We all know that many aging Americans face a tough retirement. Their savings have been ravaged by two bear markets and two recessions in less than a decade. The traditional defined benefit pension plan that provides an income for life is increasingly rare for private-sector workers and under assault in the public sector.
The latest Economic Report of the President by the White House Council of Economic Advisors highlights declining participation in employer-sponsored retirement plans. Between 2000 and 2010, the share of private sector workers between the ages of 21 and 64 who participated in an employer-sponsored retirement plan fell from 48 percent to 39 percent. That’s not all. The housing market is down about one-third since its peak in 2006.
Taken altogether, the share of households “at risk” of suffering a steep decline in their living standard in retirement is at a chilling 51 percent, up from 38 percent in 2001 and 31 percent in 1983. The National Retirement Index chart in this post comes from Chapter 7 of the Economic Report of the President, Preserving and Modernizing the Safety Net. It’s well worth reading.
The National Retirement Risk Index, 1983–2009
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