Critically Assessing Claims of a “Retirement Crisis”

Public opinion surveys find that most Americans believe the country faces a “retirement crisis” of inadequate savings, a view loaned support by numerous studies that have received considerable media coverage. In this article, I assess the retirement savings adequacy of US households in two ways. First, I critically analyze 10 studies concluding that Americans have significantly undersaved for retirement, finding that most have one or more flaws that undercut their conclusions. Second, I examine a range of data looking at the income adequacy of current US seniors and of the retirement savings habits of working-age households. US seniors today have substantially higher incomes than past generations of retirees and have nearly closed the income gap with working-age households. Current working-age Americans are preparing better for retirement in many ways, including retirement plan participation rates, contribution rates, asset levels, labor supply at older ages, and Social Security claiming ages. While the majority of Americans appear to believe the country faces a retirement crisis, a more skeptical analysis of the evidence for such views paints a more positive picture.