More Bad News about Retirement

We all know about the inequality in workplace retirement benefits, with few low-wage workers and most high-wage workers participating in employer-sponsored retirement plans. In a new report, the Center for Retirement Research piles on with more bad news: even those fortunate enough to have a retirement plan are losing ground. Fewer are covered by a retirement plan, the income projected to be generated from retirement plans is declining, and retirement wealth is increasingly concentrated among the most highly educated (i.e. the most affluent). Consequently, say the researchers, "future retirees will be much more dependent on Social Security than those in the past."

Analyzing Health and Retirement Study data for households with a respondent aged 51 to 56, the researchers examined pension participation, pension wealth, and projected retirement income from 1992 through 2010. "Although retirees will need more from employer-sponsored plans," say the researchers, "they will receive less" for several reasons...

• The percentage of households with either a defined-benefit or defined contribution retirement plan fell from 68 to 63 percent between 1992 and 2010.
• Median pension wealth for 51-to-56-year-olds with coverage in 2010 was only $162,852, down from $187,584 in 2004.
• The most-educated quartile of households control a growing share of pension wealth. In 2010, they controlled 52% of defined-contribution retirement plan wealth.
• Median projected retirement income from retirement plans was just $20,813 in 2010, down from $24,657 in 2004.

Source: Center for Retirement Research at Boston College, Pension Participation, Wealth, and Income: 1992-2010