Lack of assets will mean retirement insecurity for middle class families
Posted: October 14, 2021 at 10:00 a.m. EDT|Update: 3 hours ago
WASHINGTON, October 14, 2021 / PRNewswire / – New Analysis Finds Middle Class Households Across Generations In The United States Have Few Financial Assets And Median Amounts Held Are Well Below Assets Needed To Fund A Secure Retirement . In 2019, middle-class Millennials owned just 14% of their generation’s financial assets. The numbers are even worse for Gen Xers and middle-class baby boomers, who held eight and six percent of their generation’s financial assets, respectively.
In America, the middle class can no longer afford to retire.
These findings are contained in a new research infographic from the National Institute on Retirement Security (NIRS). Read the research here. This infographic complements a recent NIRS report, Striking inequality: inequality in financial assets undermines pension security, available here.
“In America, the middle class can no longer afford to retire. Middle-class Americans face steep economic inequalities, with ownership of financial assets heavily concentrated among the wealthy,” said Tyler bond, NIRS research director. “Now that we have a retirement system built largely around individual ownership of financial assets in 401 (k) accounts, middle-class Americans are struggling to accumulate enough financial assets during their working years. This means the retirement outlook for many members of the middle class is bleak at best. “
Research also finds low numbers when examining average and median financial assets held.
- For middle-class millennial households in 2019, average financial assets held were $ 17,802, and the median was $ 7,800.
- Middle-class Gen X households had average financial assets of $ 62,944, and the median financial assets of $ 39,000 in 2019.
- For middle-class baby boomers, the average amount of financial assets held was $ 93,298 in 2019, while the median was only $ 51,700.
“Baby boomer households are retired or close to retirement, but their assets are well below what is needed to fund a secure retirement,” Bond explained. “A nest egg of $ 51,700, the median amount held by middle-class baby boomers, would only generate 2000 $ annual income over 30 years. This means that many middle-class baby boomer households may find it difficult to retire and face a sharp reduction in their standard of living. “
Research indicates that implementing pragmatic policy solutions can help middle-class households move on a better path to saving for retirement, including strengthening and expanding social security; protect defined benefit pensions; and ensuring access to a retirement savings plan through an employer.
For this research, the middle class is defined as people between the 30th and 70th percentiles of net worth, or the middle 40%. As in the Blatant inequality report, three generational cohorts are included in this analysis of the middle class: Generation Y, Generation X and Baby Boomers.
The research is based on data from the Federal Reserve’s Survey of Consumer Finances (FCS). It examines the ownership of financial assets, a broader category than pension assets. According to the SCF, the category of financial assets includes liquid assets, certificates of deposit, directly held mutual funds, stocks, bonds, near-liquid assets, savings bonds, whole life insurance. , other assets under management and other financial assets. It does not include physical assets such as a house or a car. The data from this research relates to households rather than individuals.
The National Institute for Retirement Security is a non-profit, non-partisan organization created to contribute to informed policy development by fostering a deep understanding of the value of retirement security for employees, employers and the economy as a whole. Situated in Washington DC, NIRS members include financial services companies, benefit plans, professional associations, and other pension service providers. More information is available at www.nirsonline.org. Follow NIRS on Twitter @NIRSonline.
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SOURCE National Institute for Retirement Security
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