WASHINGTON, Feb. 28 – Ahead of this morning’s hearing in the Senate Health, Education, Labor, and Pensions (HELP) Committee on the retirement crisis in America, Sen. Bernie Sanders (I-Vt.), chairman of the committee, released a stunning new report exposing the depth of the crisis, while also exploring solutions that will allow all Americans to retire with dignity and security – not just the very wealthy.
Key findings from the report include:
- Nearly half of Americans 55 and older have no retirement savings.
- 52 percent of Americans 65 and older are living on less than $30,000 annually and one in four survive on less than $15,000 per year.
- Nearly 5.3 million Americans 65 and older live in poverty, roughly 1 in 10 seniors.
- Nearly half of all Americans are at risk of a financially insecure retirement, up from one in three workers in 1983.
- The average monthly Social Security benefit in 2023 was only about $1,782, or $21,384 annually.
- The top 20 percent of earners receive 63 percent of the $202 billion in annual income tax breaks for retirement accounts, while the bottom 60 percent receive just 13.4 percent of these breaks.
“In the richest country in the history of the world, a secure and dignified retirement should be available to every American, not just the extreme wealthy,” said Sanders. “Right now, more than half of older Americans have no retirement savings. More than 50 percent of our nation’s seniors are trying to survive on an income of less than $30,000 a year. That is absurd. Congress must address the retirement crisis facing working class Americans across our country.”
The report finds that defined benefit plans, which provide workers with monthly pension payments, are the most cost-efficient way to provide a secure lifelong retirement. A defined benefit plan typically is 49 percent more cost effective than a defined contribution account, which leave workers beholden to individual investment returns. Yet roughly 27.2 million workers participated in defined benefit plans in 1975, versus 11.2 million workers participating in defined contribution plan. In 2019, 85.5 million workers participated in defined contribution plans versus 12.6 million defined benefit plan participants.
The Congressional Budget Office found the shift from defined benefit to defined contribution plans may explain about one-fifth of the increase in wealth inequality from 1989 to 2019.
The report also examined how workers are 15 times more likely to save for retirement if they can do so via payroll deduction and 20 times more likely to save if access to a workplace retirement plan is automatic. Today, roughly 57 million Americans do not have a way to save for retirement easily and automatically out of their regular paycheck and only 13.5 percent of workers have a pension.
To read the report, click here.
