How state-run programs can fix the retirement-savings gap
Many Americans aren't saving enough for retirement — and the shortfall could put a strain on state and federal budgets in the coming decades. But research shows that state-run programs could help people save for retirement while reducing that strain.
Without changes, the retirement savings gap could create a $1.3 trillion economic burden through 2040, with increased public assistance costs, lower tax revenue and more, according to a study released Thursday by the Pew Charitable Trust.
If the current trends continue, 61% of elderly households are expected to have an annual income below $75,000 in 2040, and the yearly income shortfall is projected to be $7,050 by the same year.
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"Many of these retiree households with a shortfall in annual income will need social assistance in some form or another," said John Scott, director of the Pew Charitable Trusts' retirement savings project.
Roughly half of working households may struggle to maintain their pre-retirement standard of living in their golden years, the Center for Retirement Research at Boston College reported this week.
One of the key issues is limited access to workplace retirement plans. As of March 2022, more than 30% of private industry workers didn't have an employer retirement plan, according to the U.S. Bureau of Labor Statistics.
Source: CNBC
