Many Americans face a scary prospect: surviving on much less money during retirement than they’re used to living on or not being able to afford a retirement at all. Every year, there are new reports about how many Americans are unprepared for retirement, with headlines like “42% of Americans Will Retire Broke” (Huddleston 2018) and “How 401(k)s Have Failed Most American Workers” (Morrissey 2016).
There’s sometimes debate among academics and researchers about the precise nature of the retirement-savings gap (Rhee 2013; Bee and Mitchell 2017; VanDerhei 2015). No matter how you slice it, however, nearly half of Americans have saved nothing for retirement, and the median 401(k) balance is less than $10,000 among working-age U.S. households that have saved something (Spiegel 2018; Grinstein-Weiss 2015). If that amount doesn’t change, people’s ability to comfortably retire is severely limited, and they’re highly dependent on Social Security remaining solvent. And many Americans are worried. In a recent EBRI survey, for example, only 17% of U.S. workers felt very confident in their ability to retire comfortably (EBRI 2018).