Retirement on Hold: American Workers $6 Trillion Short
A new study obtained by CNBC says Americans are $6.6 trillion short of what they need to retire.
The study, conducted by Boston College’s Center for Retirement Research, says savings have been squeezed by declines in stock and housing values.
The study was commissioned by Retirement USA, a coalition of organized labor and pension rights advocates that hopes to use the study to push for a more stable retirement system. The group plans to unveil the study at a news conference in Washington on Wednesday.
The $6.6 trillion figure is based on projections of retirement and income for American workers ages 32-64. The study’s authors say they arrived at the amount using conservative assumptions, including a 3 percent rate of return on assets and no further cuts in pension coverage or increases in the Social Security retirement age.
“Using other assumptions, it could be much higher,” said Maria Freese, Director of Government Relations and Policy for the National Committee to Preserve Social Security and Medicare. For example, the study notes, if the rate of return matches the return on U.S. Treasury Inflation-Protected Securities (TIPS), currently 1.87 percent, the deficit balloons to $7.9 trillion.
This announcement comes on the heels of other sobering news: Milliman Inc., a Seattle-based actuarial and consulting firm, reported this week that the funded status of the 100 largest corporate defined benefit pension plans dropped by $108 billion during August 2010.
This comes amid recent reports indicating that a White House-created panel is considering proposals to cut Social Security benefits and raise the retirement age.
“The ‘Retirement Income Deficit’ should be a wake-up call to Americans everywhere,” Freese said.
Cat Corrigan contributed to this story.