How Americans are saving for retirement and how much they have stashed away

More Americans have retirement accounts today when compared with past decades – but that doesn’t necessarily mean everyone is saving enough to live comfortably throughout their later years.

According to a new study from the Government Accountability Office (GAO), the percentage of households with retirement accounts – including defined contribution (DC) plans and IRAs – increased across income levels between 1989 and 2016.

Eleven percent of individuals in the bottom wealth quintile had retirement accounts in 2016, compared with 4 percent in 1989.

While the 2016 numbers were higher, however, they were still below the pre-recession rates.

Wealthy Americans were much more likely to have a DC plan or IRA – 86 percent of the top 20 percent of Americans did so in 2016, up from 65 percent in 1989.

These patterns have emerged as employers have expanded access to defined contribution plans.

However, researchers noted that the “amount in retirement accounts was often low, particularly for the lower quintiles.”

While 89 percent of the lower quintile had no retirement accounts at all, another 10 percent had balances below $50,000.

About one-third of individuals in the second-to-lowest quintile had a retirement account, but 26 percent had balances below $50,000. An equal amount in the middle quintile had balances below $50,000 – though 56 percent had a retirement account.

On the flip side, 50 percent of Americans in the top quintile had account balances in excess of $500,000.

Overall, 42 percent of Americans reported having no retirement savings at all, according to a 2018 survey from the Center for Financial Services Innovation.

An analysis into savings is important at a time when Baby Boomers are both retiring and living longer lives – by 2030 one in three Americans will be aged 55 or older.

The study found that Americans in the bottom 20 percent will rely more heavily on Social Security benefits as a source of financial security in retirement – compared to the top two quintiles of Americans who depend primarily on wealth.

But the Social Security trust fund will only be able to pay about 77 percent of benefits by 2034 – unless action is taken in Congress.

Longer lives are also leading to increased health care costs, According to a recent study conducted by financial services firm Fidelity Investments, a 65-year old couple retiring this year will spend about $285,000 in health care and medical expenses throughout retirement – and that assumes both individuals are eligible for Medicare coverage.


Congress is aware of the retirement savings challenge. House lawmakers have advanced a retirement bill that would make retirement plans even more accessible to workers. The legislation would make it easier for small businesses to band together to offer multi-employer plans, while requiring businesses to allow some part-time workers to participate. The bill still needs to be taken up by the Senate.