Center-class Individuals face retirement insecurity, evaluation finds


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According to an analysis by the National Institute on Retirement Security, a nonprofit, non-partisan research and education organization, middle-class US households have limited financial assets and may face uncertainty in retirement.

The study examined financial assets by generation, wealth, and race based on data from the Federal Reserve’s Survey of Consumer Finances.

In 2019, middle-class households – with average net worth of $ 22,630 for Millennial households, $ 150,500 for Generation X, and $ 236,350 for Baby Boomers – own only a small fraction of their generations’ total financial wealth, suggesting that the Wealth is concentrated in more affluent households.

While middle-class millennials own 14% of their generations’ wealth, the amounts are lower for Gen X and Boomers, who each own a single-digit percentage of the wealth.

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In addition, the average financial wealth of middle class households, which excludes physical assets such as houses, shows that the savings of each generation may not be sufficient for retirement.

Middle-class baby boomers had an average net worth of $ 51,700, but the amounts were significantly lower for Black and Hispanic families at $ 30,900 and $ 22,280, respectively.

Although Generation X middle-class households still have some time to go before retirement, analysis shows that with a median wealth of $ 39,000, they may not be on the right track. And with less time in the work place, millennials had the smallest fortune at $ 7,800.

“Middle-class Americans struggle to amass sufficient financial assets during their working years,” said Tyler Bond, director of research at the National Institute on Retirement Security.

These results are in line with other data showing that the savings of most older Americans are inconsistent with their expected retirement income.

According to a survey by the Insured Retirement Institute, more than half of American workers over 40 have saved less than $ 50,000 for retirement, and the majority are not increasing savings to grow their nest egg.

In addition, many Americans do not take advantage of company retirement plans. About 17% of those who have access to employer accounts like 401 (k) plans are not contributing, a MagnifyMoney report shows.

And of those who participate in workplace plans, 17.5 million savers leave their company’s matching funds on the table.

The majority of people who have not offered a 401 (k) or other type of plan through their employer simply will not save.

Tyler bond

Research Director at the National Institute on Retirement Security

However, many workers still do not have access to company pension plans, Bond said, adding.

According to the US Bureau of Labor and Statistics, about 67% of private employees have company-provided retirement plans, and while those without employer plans may save through individual retirement accounts, they are less likely to do so.

“There’s a lot of data to show that people don’t,” Bond said. “The majority of people who haven’t offered a 401 (k) or some other type of plan through their employer are just not going to save.”

While Congress passed changes to the U.S. pension system with the Secure Act of 2019, two bipartisan bills in the House and Senate aim to build on that legislation.

The bills, among other proposals, may expand the “catch-up contributions” for savers 50 and older and give 401 (k) access to part-time workers.

“Old-age insurance seems to be one area where there can still be bipartisan collaboration up the hill,” Bond said.

In addition, state individual retirement accounts, like the California, Illinois and Oregon plans, are gaining traction as lawmakers look for ways to fill the retirement savings gaps, he said.

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