U.S. Household Savings for Retirement in 2010 [July 23, 2013]   [open pdf - 537KB]

"Whether households have sufficient savings from which to ensure adequate income throughout retirement is a concern of households and, therefore, policymakers. The retirement income landscape has been changing over the past few decades. Although most households are eligible to receive Social Security benefits in retirement, over the past 30 years, the types of non-Social Security sources of retirement income have been changing. About half of the U.S. workforce is covered by an employer-sponsored pension plan. An increasing number of employers offer defined contributions (DC) pension plans (i.e., tax-advantaged accounts in which employee, and sometimes employer, contributions accrue investment returns) in lieu of traditional defined benefit (DB) pension plans (i.e., monthly payments to a retiree by a former employer). This shift in the nature of employer-sponsored pensions places more responsibility on workers to financially prepare for their own retirement. Households also save for retirement using Individual Retirement Accounts (IRAs), into which contributions, up to a specified limit, are tax-deductible for some individuals. Congress has several reasons for its interest in the retirement preparedness of American households: income from Social Security may be insufficient to provide for an adequate standard of living in retirement for U.S. households; congressional actions may encourage or discourage employer and household efforts to provide for their own well-being in retirement; and the U.S. Treasury will forego $117 billion in FY2013 as a result of tax policies that are designed to encourage employer and worker retirement savings. President Obama's FY2014 budget would prohibit contributions to DC pension plans and IRAs that have a value over $3.4 million. This threshold is specified to be equivalent to the maximum annual payment allowed from a DB pension plan, which is $205,000 in 2013."

Report Number:
CRS Report for Congress, R43057
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