While this trend is, of course, very encouraging, many individuals are still struggling to save for retirement. This was noted by Research Director Jack VanDerhei of the Employee Benefit Research Institute (EBRI) in testimony before the Senate Committee on Health, Education, Labor and Pensions (HELP). According to EBRI, about 44% of Baby Boomers and Gen X households are believed to be at risk of running short of money in retirement, although this can be by as little as one dollar or well into the tens of thousands of dollars. This factors in housing equity and other financial resources. Including uninsured healthcare costs in the equation, EBRI projects a $4.3 trillion retirement income deficit just among Baby Boomers and Gen X'ers. EBRI adds that the challenge is even greater for women because of longer life expectancies than men, shorter tenures in the workforce, and differences in pay. EBRI also testified that the presence of a defined benefit (DB) plan has a positive impact on retirement income adequacy, by reducing the at-risk group of Baby Boomers and Gen X'ers, particularly among low- and middle-income participants. EBRI urges an increase in the typical default deferral rate from 3% to 6%.
More details can be found in Fidelity's news release and in EBRI's submitted testimony to the HELP committee.