40% of workers 50-60 years of age - that’s 8.5 million people - will likely fall into or near poverty in retirement, finds a Schwartz Center for Economic Analysis study. The study says insufficient savings in DC plans and low coverage by DB plans are among the main drivers of the projected downward mobility.
The report also found that delaying the retirement age from 62 to 65 years old, will still leave people with insufficient incomes - 5 million people will be downwardly mobile and 1.2 million will fall below the Federal Poverty Level. Delaying retirement until 65 would only increase a couple’s annual retirement income by just $8,500.
The report says to solve this problem policymakers should strengthen Social Security and American workers need a stronger second tier. The study says Guaranteed Retirement Accounts “provide a safe, effective vehicle for workers to accumulate personal retirement savings over their working lives.”