07.28.23

NEWS: New GAO Report Finds Retirement Savings Stagnate for Middle-Class Americans, While the Wealthy See Huge Gains

Report shows that retirement account disparities have increased by income and persisted by race over time

WASHINGTON, D.C. — According to a new report—commissioned in 2020 by Senators Bernie Sanders (I-Vt.), Chairman of the Health, Education, Labor, and Pensions Committee, and Sheldon Whitehouse (D-R.I.), Chairman of the Committee on the Budget, and released yesterday by the Government Accountability Office (GAO)—the gap in retirement account balances between middle- and high-income older households more than doubled from 2007 to 2019. While the median account balance for high-income older households nearly doubled from $333,000 to $605,000 over that time, the median account balance for middle-income older households stagnated at about $64,300—nine times less than the median balance of high-income older households.

The report, titled “Retirement Account Disparities Have Increased by Income and Persisted by Race Over Time,” also highlights the huge portion of Americans who lack any retirement savings at all. As of 2019, nine in 10 of the lowest-income older households had no savings in a retirement account. In fact, the share of the lowest-income households with any retirement account balance decreased from 21 percent in 2007 to about 10 percent in 2019. 

“At a time when half of older Americans have no retirement savings at all, it is unacceptable that taxpayers are forced to spend billions of dollars subsidizing the retirement accounts of the wealthiest people in America,” said Sanders. “The same Republican politicians who support cutting Social Security have no problem providing massive tax breaks to subsidize the retirement accounts of the top one percent. In America today, 55 percent of seniors are trying to survive on less than $25,000 a year. Given that reality, our job is to make sure that the working class in our country are able to retire with the dignity and the respect that they deserve, not to provide more tax breaks to the billionaire class.”

“After a lifetime of work, all Americans should be able to retire with dignity,” said Senator Whitehouse. “But today, millions of Americans are retiring with no savings. Our rigged tax code is subsidizing the retirement of billionaires and leaving everyone else to foot the bill. As a result, wealthy households have nine times more saved than the average middle-class household, and just 10 percent of the lowest-income families have anything saved at all. Auto-enrollment in workplace retirement accounts would reduce the access gap and make it easier to save, but we must also protect Social Security for all and ensure the wealthy pay their fair share so that all can retire with financial security.”

The report also shows that racial disparities persist in retirement savings. In 2019, about 63 percent of white households had a retirement account balance compared to about 41 percent of households of all other races. Among households that had retirement savings in 2019, white households had double the median balance of all other races ($164,000 to $80,300, respectively).

The report also examines how access to workplace retirement accounts remains a huge issue, with significantly lower access among low-income households. For example, high-income older households were more than three times more likely to have access to workplace retirement accounts than low-income older households (about 75 percent to 23 percent, respectively).

One of the reasons that retirement account disparity based on income has worsened between 2007 and 2019 is the upside-down nature of the U.S. tax code. As the report notes, the tax code provided $195 billion in tax breaks to subsidize retirement in 2022. According to a 2021 Congressional Budget Office (CBO) study, the top 20 percent of households by income benefit from over 60 percent of these tax breaks compared to under 5 percent of the bottom 40 percent. Another GAO report, published in 2019, found that roughly half of all households headed by someone age 55 and over have no retirement savings at all.

This latest report released yesterday follows another GAO report, commissioned by Sanders and published in 2022, which found that that higher-income and wealthier individuals in the U.S. live significantly longer than poorer individuals and that life expectancy for low-income Americans is actually in decline. 

Read the full report, here.