Making the Case for a New System

Our Current Retirement System Not Universal... Not Secure... Not Adequate

A secure retirement is part of the American dream. Yet our retirement system is failing many Americans. Social Security is the cornerstone of our system, but as currently structured, is not meant to be our only retirement program. Pension and savings plans are supposed to fill the gap, but too many workers don’t have plans, and too many plans don’t do the job. Many of today’s retirees are barely getting by:

  • Half of people age 65 and over receive income of less than $18,337 a year from all sources. One quarter have incomes of less than $11,139.
  • Social Security benefits for the average retiree are $14,050 a year, less than the income of a full-time minimum-wage worker.
  • Nearly seven out of ten (69%) older Americans depend on Social Security for more than half of their income, and one out of four (26%) receive all of their income from Social Security.

Private retirement plan coverage is not UNIVERSAL

  • Only half (51%) of full-time private sector employees participate in an employer-based retirement plan.
  • The participation rate drops to 44% if part-time employees are included.
  • Only 28% of full-time workers in the bottom fourth of earnings participate in an employer plan. 

For millions of Americans, private retirement benefits are not SECURE

  • Only two in ten private-sector workers participate in traditional pension plans that provide guaranteed, lifetime benefits.
  • Three in ten private-sector workers rely entirely on 401(k) plans to supplement Social Security.
  • Fifty-six percent of 401(k) plan investments are in stocks, which lost about a quarter of their value in 2008. Though the market has since rebounded, account balances are still well below their peak.

Private retirement benefits are not ADEQUATE

  • In 2006, half of private-sector workers with employer-sponsored defined contribution plans had less than $25,000 in these accounts.
  • Even for private-sector workers approaching retirement—ages 55-64—the median account balance was just $40,000.
  • Looking at both public and private-sector households, and including IRAs, the median account balance in 2007 near the peak of the stock market was $45,000.
  • For households approaching retirement – ages 55-64 – the median account balance was $98,000, enough to purchase an annuity that replaces just 10% of these households’ incomes.
  • Over 70% of households in the bottom fifth of earnings reach retirement age without any employer-sponsored coverage—whether pension benefits or retirement account savings.



Bucks, Brian K., Arthur B. Kennickell, Traci L. Mach, and Kevin B. Moore. 2009. Changes in U.S. family finances from 2004 to 2007: Evidence from the Survey of Consumer Finances. Federal Reserve Bulletin. Vol. 95, pp. A1A38.

Census Bureau, Current Population Survey, 2009, PINC-01, Parts 1 and 82.

Economic Policy Institute analysis of Federal Reserve Survey of Consumer Finances public data.

Jack VanDerhei, Sarah Holden, and Luis Alonso. 2009. 401(k) plan asset allocation, account balances, and loan activity in 2008. Investment Company Institute Perspective, Vol. 15, No. 2.

Munnell, Alicia H., and Pamela Perun. 2006. “An Update on Private Pensions.” Center for Retirement Research, Issue Brief No. 50. Chestnut Hill, Mass.: CRR.

Purcell, Patrick. 2009. Income and Poverty Among Older Americans in 2008. Congressional Research Service Report for Congress. Washington, D.C.: CRS.

Purcell, Patrick. 2009. Pension Sponsorship and Participation: Summary of Recent Trends. Congressional Research Service Report for Congress. Washington, D.C.: CRS.

Purcell, Patrick. 2009. Retirement Plan Participation and Contributions: Trends from 1998 to 2006. Congressional Research Service Report for Congress. Washington, D.C.: CRS.

U.S. Social Security Administration, Office of Retirement and Disability Policy. 2010. “Monthly Statistical Snapshot, July 2010.” Web. August 2010.