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GAO Sounds Warning Bell on Retirement Savings

A majority of households age 55 and older do not have retirement savings. That sobering news comes from a recently released study by the Government Accountability Office (GAO). “Retirement Security: Most Households Approaching Retirement Have Low Savings” says that 52% of such households are in that position.

The 52% is derived from the 29% that do not participate in a defined benefit plan and have no retirement savings and the 23% that do participate in a DB plan but have no savings. The 29% had the median financial assets of $1,000, a median annual income of just under $19,000 and a median net worth of $34,760.

And the report contains even more sobering information. The GAO notes that approximately half of the respondents to one survey retired earlier than they had planned — due to health, workplace changes or other factors — and that this suggests they may overestimate their future retirement income and savings.

And just because 48% do have some retirement savings, that doesn’t necessarily mean they’re flush with cash. Their median savings amount is approximately $104,000 for households age 55-64 and $148,000 for households age 65-74, the GAO says. That is equivalent to an inflation-protected annuity of $310 and $649 per month, respectively, according to the report.

The findings are based on the GAO’s analysis of the 2013 Survey of Consumer Finances.