You’re Probably Saving Enough for Retirement
August 23, 2023
The headlines are meant to alarm you. “Millions of older workers are nearing retirement with nothing saved,” CBS News reports. “Only one in 10 low-income workers between the ages of 51 and 64 had any retirement savings in 2019, says the New York Post, citing “a troubling report recently published by the US Government Accountability Office.” Meanwhile, nearly all high-income Americans are saving, an inequality the GAO attributes to the federal tax preference for retirement-plan contributions.
All of this is confused, at best. The report analyzes households of workers 51 to 64 using the Federal Reserve’s Survey of Consumer Finances. The SCF data do show that only around 1 in 10 households in the bottom fifth of incomes in 2019 reported having a retirement account, such as a 401(k) or IRA. The report prompted Sens. Sheldon Whitehouse and Bernie Sanders to lament “the huge portion of Americans who lack any retirement savings at all.”
But the GAO misinterprets the Fed data in three important ways that, once corrected, paint a much more encouraging picture.
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