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FACT SHEET
SCEPA’s Retirement Income Security Project
Near Retirees’ Defined Contribution Retirement Account Balances:
Analysis of the 2008 Survey of Income and Program Participation (SIPP), Wave 7i
By Joelle Saad‐Lessler and Teresa Ghilarducci
July 2012
Despite the growing tax breaks and intensive advertising campaigns for retirement accounts ‐‐
most of which are 401(k) plans and Individual Retirement Accounts (IRA) ‐‐ Americans ages
50‐64, 58 million of them in 2010, will likely not have enough retirement assets to maintain
their standard of living when they reach their mid‐sixties1
. The addition of a weakening labor
market for older workers means we are headed for a retirement income security crisis.
Three quarters of near retirees (ages 50 to 64) have annual incomes below $52,201, with an
average total retirement account balance of $26,3952
. When stretched out into an annuity
over an average retirement lifetime, this sum does not provide a significant addition to a
monthly Social Security benefit (see Table 1.) Further, the median value of retirement account
balances for half of near retirees is zero, meaning that over half of this group has no retirement
savings.
Individuals with incomes over $52,201 per year have more in their retirement accounts, but
their balances are not high. Their average retirement account balance for this income group is
$105,012. Because only a few people have very high balances, the median balance is much
lower; 50 percent of people ages 50‐64 in the top 25 percent of the income distribution have
retirement account balances of only $52,000. (See Table 1 for this information and Table A1 in
the Appendix for average and median account balance by account type and income level.)
1
This study does not include workers with defined benefit (DB) retirement plans, as those balances are not
computed in the Asset Module of the SIPP’s Wave 7.
2 The average of the bottom, middle and third quartiles: ($16,034 + $21,606 +$41,544) /3
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Schwartz Center for Economic Policy Analysis (SCEPA) at The New School : 212.229.5901 x1 : www.economicpolicyresearch.org
Table 1: Average and Median Retirement Account Balances of People Ages 50‐64
in the U.S., by Personal Annual Income as of November 2010
Total Personal Income
Quartiles
All Retirement
Accounts
Number of Americans
ages 50‐64
Bottom 25th percentile
($0‐$10,800)
Mean $16,034
14,595,911
Median $0
25‐50th percentile
($10,801‐$27,468)
Mean $21,606
14,485,878 Median $0
50‐75th percentile
($27,469‐$52,200)
Mean $41,544
14,534,878 Median $6,500
75‐100th percentile
(More than $52,201)
Mean $105,012
14,528,221 Median $52,000
Data Source: SIPP 2008 Panel, wave 7, August‐November 2010. Figures in the table include people who have zero or greater
retirement account balances.
The low average and median retirement account balances are explained, in part, because a vast
majority of older Americans have no retirement account at all (see Table 2). The breakdown
according to income quartiles is as follows: over three‐quarters of low income individuals, 65
percent of people in the second quartile, 40 percent of the third quartile, and a quite large 23
percent of the top quartile have no retirement account balances.
Table 2: Percentage of Americans Ages 50‐64 with no retirement savings, by
income quartile
Total Personal Income Quartiles Near Retiree Americans with No
Retirement Accounts
Bottom 25th percentile ($0‐$10,800) 77%
25‐50th percentile ($10,801‐$27,468) 65%
50‐75th percentile ($27,469‐$52,200) 40%
75‐100th percentile (More than $52,201) 23%
Data Source: SIPP 2008 Panel, wave 7, August‐November 2010.
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Holdings of Those with Retirement Account Balances
Because policymakers and the retail industry base their policies and practices, respectively, on
individuals voluntarily accumulating assets in retirement accounts, we examined those who had
positive account balances in all three types of Defined Contribution (DC) accounts (see Table 3.)
Not many people fall into this category – 9 percent in the bottom quartile, 10 percent in the
second, 29 percent in the third, and a large 52 percent in the top. However, these people
represent those Americans who should be well‐served by the system. Surprisingly, the
retirement account balances of this lucky and/or disciplined group are not high either.
The account balances for those who have the most – those with positive values in each account
type and whose incomes are in the top 25 percent ‐ have average holdings of $240,463 and
median balances worth $214,000. These sums are too small given that people need ten times
their income at retirement to maintain their standard of living when they stop working and
individuals in these households have incomes far exceeding $24,000 per year3
.
Table 3: Average and Median Retirement Account Balances in the U.S. for
People Ages 50‐64, by Personal Income Quartiles, November 2010
Total Personal Income
Quartiles All Retirement
Accounts
Fraction of the
Population of
Positive Balance
Account Holders*
Bottom 25th percentile
($0‐$10,800)
Mean $ 251,577 9%
Median $ 123,000
25‐50th percentile
($10,801‐$27,468)
Mean $ 211,715 10%
Median $ 133,000
50‐75th percentile
($27,469‐$52,200)
Mean $ 105,656 29%
Median $ 75,000
75‐100th percentile
(More than $52,201)
Mean $ 240,463 52%
Median $ 214,000
Data Source: SIPP 2008 Panel, wave 7, August‐November 2010. Excludes people who have zero balances in IRA, KEOGH or
401K/403B Accounts.
*Includes those with balances in all three accounts
3 AARP retirement Calculator