Awhopping 38 million Americans - 45% of working-age people - lack any form of retirement account such as an individual IRA or employer sponsored 401(k)-type plan, according to a report from the National Institute on Retirement Security in Washington.

"The first place where people get access to retirement savings vehicles is in the workplace," explains Nari Rhee, NIRS manager of research and author of the report, The Retirement Savings Crisis: Is it Worse Than We Think? "And that's where the problem originates. In the workplace, only about half of workers actually work for an employer who sponsors a plan."

Those numbers, combined with high unemployment levels and the complexity of the investments themselves, which often hinder people from opening their own individual plans, makes things difficult for households.

"This shows that there needs to be some sort of automated [system] for people to do their retirement savings in a way that makes it easier for households to do that," adds Rhee. "The workplace is the best place to do that because you have access to people's paychecks. [But] there is still a role for financial planners in this process as families need to think about what their needs are for retirement, or what they might actually need when they get there. As far as the pure voluntary system we have now, the numbers clearly show that it is not working."


Only a few thousand dollars saved

The report from the nonprofit research and education group also shows that when all working-age families are counted, the typical family has only a few thousand dollars saved for retirement. When all households are included - not just households with retirement accounts - the median retirement account balance is $3,000 for all working-age households and $12,000 for near-retirement households.

Four out of five working families have retirement savings less than one times their annual income. NIRS says that because of this low level of savings, the U.S. retirement savings deficit is between $6.8 and $14.0 trillion, depending on the household assets counted.

Rhee adds that the country has moved from a defined benefit to a defined contribution system. As a consequence, the only secure source of retirement income is through the Social Security System for many people. The NIRS recommends strengthening and stabilizing Social Security. Also, the report suggests making access to workplace retirement plans more available by expanding them and making it easier for employers to sponsor DB pension plans. Finally, it suggested that making the Saver's Credit refundable could help boost the retirement savings of lower-income families.

The report, available at, used the Federal Reserve's Survey of Consumer Finances to analyze retirement plan participation, savings and overall assets of all U.S. households age 25 to 64.

Joel Kranc is director of Kranc Communications. He has written and worked in the retirement and institutional investment space for 17 years, covering North American markets, large institutional pensions and the adviser community. He can be reached at .

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