There's a lot of talk about the federal budget deficit but a Washington advocacy group says there's an even more threatening deficit facing the United States: a "retirement income deficit" that the group pegs at $6.6 trillion. The figure represents the gap between the pensions and retirement savings that American households have today and what they should have today to maintain their living standards in retirement, according to Retirement USA.
The Retirement Income Deficit is based on projections of retirement income and wealth for American workers ages 32-64. The figure was calculated for Retirement USA by the Center for Retirement Research at Boston College, using methodology developed for the Centers National Retirement Risk Index.
The calculation is based on an analysis of about 70 million households comprising people in their prime earning years, between 32 and 64. There is an average deficit of about $90,000 in retirement savings for each household.
"The number should be a wake-up call," said Maria Freese, director of government relations and policy for the National Committee to Preserve Social Security and Medicare. " It is a measure of how far behind Americans are in their retirement savings today. Cuts to Social Security, pension freezes, and 401(k) losses on the stock market could easily make the Retirement Income Deficit much, much worse in the future.
The key sources of income that retirees have relied on are either under attack in the case of Social Security or disappearing in the case of traditional pensions, said Ross Eisenbrey, vice president of the Economic Policy Institute, 401(k) plans are not working, and millions of workers have neither a pension nor a 401(k) account. Clearly, the current private retirement system is failing most Americans.
Featured at a press conference announcing the campaign were two women who shared their own personal retirement income deficit stories and who will be part of a "story bank" the group is assembling: Shareen Miller of Falls Church, Va., and Constance Canby Morton of Westmoreland County, Va.
Miller is a personal care assistant who has no retirement plan through her employer. She is afraid that she will never be able to retire, but she is also worried that she will not be able to continue to work in her physically demanding job as she ages. Canby Morton is a 66-year-old retiree who has neither a pension nor a 401(k). She and her husband have health issues, which have eaten into their savings, and they rely solely on Social Security.
The story bank shows that the Retirement Income Deficit is not merely an abstraction, said Gail Dratch, legislative representative for the AFL-CIO. The crisis impacts Americans of all ages and from all walks of life. These are the faces behind that number.
Retirement USA is a campaign for a new retirement system that, along with Social Security, will provide universal, secure, and adequate income for future retirees. The AFL-CIO, the Economic Policy Institute, the National Committee to Preserve Social Security and Medicare, the Pension Rights Center, and the Service Employees International Union are the campaign's primary supporters.
