A review of retirement readiness studies from the Government Accountability Office yielded "mixed evidence" about pre-retirees' ability to maintain their standard of living into retirement. The GAO produced the review after more than 12 months of research.
The review was requested last year by Sen. Bernard Sanders, I-Vermont, the self-proclaimed socialist, candidate for the Democratic presidential nomination, and ranking member of the Senate Subcommittee on Primary Health and Retirement Security.
Different assumptions about income requirements largely explain the disparity in assessments, the report said.
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Analysis of the 2013 Survey of Consumer Finances, which is produced by the Federal Reserve's board of governors, showed half of households age 55 and older have no retirement savings.
In the same age group, about 29 percent of those without savings also have no defined benefit assets to count on in retirement.
Among those households that do have retirement savings, the median amount is about $104,000 for households age 55 to 64, and $148,000 for households age 65 to 74.
That translates to a $310 and $649 monthly-annuitized payment, respectively, according to the report.
Survey of the Fed data shows about 23 percent of households have access to a defined benefit plan, but no retirement savings outside of that.
Specifically, Sanders asked the GAO to review the financial status of pre-retirees and retirees by examining what resources each cohort has and what evidence studies provide when drawing conclusions about retirement readiness.
Along with the Fed data, the GAO reviewed academic studies on optimal saving habits and other reports examining sources and adequacy of projected retirement income, including the University of Michigan's Health and Retirement Study, the Federal Reserve's Survey of Household Economics and Decision Making, and the EBRI's Retirement Confidence Survey.
Of the 27 percent of households age 55 to 64 with no savings or a defined benefit plan, the median net worth is about $9,000, and 91 percent of the group have less than $25,000 in assets.
Median home equity for the group is about $53,000, which is half of what households with retirement savings or a defined benefit plan have.
Median income for the group with no savings or pension plan was $21,000.
For the 59 percent of households with some savings, about 15 percent have savings over $500,000, while 11 percent have savings below $10,000. Savings of $25,000 is equivalent to a monthly annuity of $74, according to the GAO.
One 2012 study from the ICI expressed doubt the country has a retirement readiness issue.
But a 2015 study from the National Institute on Retirement Security found more than two-thirds of pre-retirees are saving inadequately.
And a study from the Center for Retirement Research at Boston College concluded that 52 percent of households face a lower standard of living in retirement due to inadequate savings.
The GAO did not provide its own conclusions on the accuracy of the reports, nor did it provide its own assessments of the country's state of retirement preparedness.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
