Low-income workers are worse off, but the system even fails high earners, one study found.
Workers in the top 20% of earnings distributions have half of all retirement wealth in both 1992 and 2010, compared with the bottom group, which saw its share fall from 3% to 1% between those years, a recent analysis at The New School’s Schwartz Center for Economic Policy Analysis found. The share of workers in the bottom fifth of the earnings distribution with no retirement savings jumped from 45% to 51% in those 18 years.
The findings reveal Americans, especially lower-income workers, nearing retirement are in dangerous territory. But some individuals within all types of lifetime earnings rates — high and low — are in trouble. In both 1992 and 2010, the top 10% of savers in each earnings distribution quintile had between 10 and 20 times as much in retirement assets as those in the bottom 10% of their groups. In the lower three quintiles of workers, the bottom 10% of each had nothing at all saved.
“Unlike income inequality which is distorted by skyrocketing incomes for the 1%, inequality in retirement wealth reflects the bottom falling out for low and moderate earners,” said Teresa Ghilarducci, director of SCEPA’s Retirement Equity Lab, and a co-author of the study.Americans have a conundrum: they face inadequate savings in the future, according to this research, but in some cases, they can’t do anything about it.
Still, future retirees would be better off if they could allocate even a small percentage of their salaries to a retirement account. Median retirement wealth falls 84% short of what it would be if people were to save 6% of every paycheck and receive a 50% employer match, according to the SCEPA study.
More from MarketWatch Alessandra Malito Alessandra Malito is a personal finance reporter based in New York. You can follow her on Twitter @malito_ali.
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