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How Small Businesses Can Help Close the Retirement Gap

The formation of so-called multiple employer plans could help address the lack of workplace retirement options for many smaller-company workers.

Is there at least a partial solution for the United States' retirement gap? Policy changes to ease the formation of so-called multiple employer plans might be the rare bipartisan idea that, even given the current dysfunction in Washington, D.C., could come to fruition.

First, some background information: Experts do not agree on the size of the retirement gap in the United States--the amount of additional money Americans need for a secure retirement--but there is consensus that it is pretty large. Jack VanDerhei of the Employee Benefit Research Institute estimates the retirement gap at a little more than $4 trillion. Alicia Munnell, who runs the Center for Retirement Research at Boston College, believes it is nearly twice as large. To put those numbers in context, the Investment Company Institute reported that in 2014, there were about $24 trillion of retirement assets in 401(k)s, IRAs, defined-benefit pension, and other retirement accounts. In the aggregate, then, it's likely that Americans need an additional 20% to 30% of investments for retirement.