Many clients, or would-be clients, desperately need your help to save for retirement.
And they need it soon.
That’s because millions of Americans are far behind in retirement savings.
Millions aren’t saving enough and are facing retirement years that will be anything but golden. It amounts to $4.1 trillion short in aggregate retirement savings, according to a recent report by the Employee Benefit Research Institute (EBRI).
It’s not all bad news. In its report, the “Retirement Security Projection Model—Analyzing Policy and Design Proposals,” the EBRI says 57 percent of U.S. households are indeed saving enough. But that means nearly 43 percent of households aren’t.
The institute says one big factor in these figures is defined contribution accounts. The more years one enjoys eligibility and contributes to such a plan, the better the chance he or she will achieve retirement saving success.
For those with 15 to 19 years of account eligibility, for example, the average share of the $4.1 trillion deficit is only some $33,000. For those with 10 to 14 years of eligibility left, the share is $40,000. Those with five to nine years of eligibility account for an average of $53,000 of the deficit and those with one to four years represent an average of $63,000.
What should be done to close these retirement savings shortfalls? Is there a bias against savings?
Part of the problem is the way the tax code treats saving and investment accounts outside the tax code, says the Tax Foundation, a Washington think tank, in its September paper, “What Are Universal Savings Accounts and Why Are They Important?”
“Long-term savings are in decline, and half of Americans are at risk for not saving enough to maintain their current standard of living in retirement,” the Tax Foundation says.