Washington – Five years after it was first announced, the nation’s Retirement Income Deficit (RID) has risen from $6.6 trillion to $7.7 trillion. The updated figure was released by the Pension Rights Center today in conjunction with a hearing on “Bridging the Gap: How Prepared are Americans for Retirement?” held by the U.S. Senate Special Committee on Aging. Testifying at the hearing was Alicia Munnell, director of the Center for Retirement Research at Boston College, which calculated the RID.
“The Retirement Income Deficit is one of the starkest illustrations of the retirement crisis we’re facing,” said Karen Friedman, executive vice president and policy director of the Pension Rights Center. “We applaud the Senate Aging Committee for holding this hearing. It offers an important opportunity to explore the causes behind the Deficit and to look for solutions that will reduce it.”
The Retirement Income Deficit is the gap between what American households have actually saved today and what they should have saved today to maintain their living standards in retirement. The updated RID is based on projections of retirement income and wealth for American workers ages 30-60, using data from the 2013 Survey of Consumer Finances.
The new RID comes on the heels of the release of a poll by the National Institute on Retirement Security (NIRS), showing that 86 percent of Americans believe there is a retirement crisis. An earlier study by NIRS estimated the nation’s retirement savings deficit to be between $6.8 and $14 trillion.
“To reduce the RID, we need to expand coverage so that future retirees have good retirement plans, and we need to come up with new types of plans that work for both employees and employers,” said Friedman. “We also need to stop attacks on existing pension plans and retiree benefits.”