RETIREMENT 

SECURITY

Most Households 

Approaching 

Retirement Have Low 

Savings

Report to the Ranking Member, 

Subcommittee on Primary Health and 

Retirement Security, Committee on 

Health, Education, Labor, and Pensions, 

U.S. Senate

May 2015

GAO-15-419

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-15-419, a report to the 

Ranking Member, Subcommittee on Primary 

Health and Retirement Security, Committee on 

Health, Education, Labor, and Pensions, 

United States Senate

May 2015

RETIREMENT SECURITY

Most Households Approaching Retirement Have Low 

Savings

Why GAO Did This Study

As baby boomers move into 

retirement each year, the Census 

Bureau projects that the age 65-andolder population will grow over 50 

percent between 2015 and 2030. 

Several issues call attention to the 

retirement security of this sizeable 

population, including a shift in 

private-sector pension coverage from 

defined benefit plans to defined 

contribution plans, longer life 

expectancies, and uncertainty about 

Social Security’s long-term financial 

condition. In light of these 

developments, GAO was asked to 

review the financial status of workers 

approaching retirement and of 

current retirees. 

GAO examined 1) the financial 

resources of workers approaching 

retirement and retirees and 2) the

evidence that studies and surveys

provide about retirement security for 

workers and retirees. To conduct this 

work, GAO analyzed household 

financial data, including retirement 

savings and income, from the 

Federal Reserve’s 2013 Survey of 

Consumer Finances, reviewed 

academic studies of retirement 

savings adequacy, analyzed 

retirement-related questions from 

surveys, and interviewed retirement 

experts about retirement readiness. 

GAO found the data to be reliable for 

the purposes used in this report. 

GAO received technical comments 

on a draft of this report from the 

Department of Labor and 

incorporated them as appropriate.

What GAO Found

Many retirees and workers approaching retirement have limited financial 

resources. About half of households age 55 and older have no retirement 

savings (such as in a 401(k) plan or an IRA). According to GAO’s analysis of 

the 2013 Survey of Consumer Finances, many older households without 

retirement savings have few other resources, such as a defined benefit (DB) 

plan or nonretirement savings, to draw on in retirement (see figure below). 

For example, among households age 55 and older, about 29 percent have 

neither retirement savings nor a DB plan, which typically provides a monthly 

payment for life. Households that have retirement savings generally have 

other resources to draw on, such as non-retirement savings and DB plans. 

Among those with some retirement savings, the median amount of those 

savings is about $104,000 for households age 55-64 and $148,000 for 

households age 65-74, equivalent to an inflation-protected annuity of $310

and $649 per month, respectively. Social Security provides most of the 

income for about half of households age 65 and older.

Select Resources for All Households Age 55 and Older

Studies and surveys GAO reviewed provide mixed evidence about the 

adequacy of retirement savings. Studies range widely in their conclusions 

about the degree to which Americans are likely to maintain their preretirement standard of living in retirement, largely because of different 

assumptions about how much income this goal requires. The studies 

generally found about one-third to two-thirds of workers are at risk of falling 

short of this target. In surveys, compared to current retirees, workers age 55 

and older expect to retire later and a higher percentage plan to work during

retirement. However, one survey found that about half of retirees said they 

retired earlier than planned due to health problems, changes at their 

workplace, or other factors, suggesting that many workers may be 

overestimating their future retirement income and savings. Surveys have also 

found that people age 55-64 are less confident about their finances in 

retirement than those who are age 65 or older.

View GAO-15-419. For more information, 

contact Charles A. Jeszeck at (202) 512-7215 

or jeszeckc@gao.gov.
Page i GAO-15-419 Retirement Savings

Letter 1

Background 3

About Half of Older Households Have No Retirement Savings, 

and Many Rely on Social Security 7

Studies and Surveys Provide Mixed Evidence on the Adequacy of 

Retirement Savings among Workers and Retirees 22

Agency Comments 36

Appendix I Objectives, Scope, and Methodology 37

Appendix II List of Selected Studies of Retirement Income Adequacy 44

Appendix III GAO Contact and Staff Acknowledgments 45

Related GAO Products 46

Tables

Table 1: Select Resources for Households Age 55-64 by 

Ownership of Retirement Savings 10

Table 2: Distribution of Retirement Savings Amounts among 

Households with Some Retirement Savings, Age 55-64 12

Table 3: Select Retirement Resources for Households Age 55-64 

by Income Quintile 12

Table 4: Select Resources for Households Age 65-74 by 

Ownership of Retirement Savings 14

Table 5: Distribution of Retirement Savings Amounts among 

Households with Some Retirement Savings, Age 65-74 15

Table 6: Select Retirement Resources for Households Age 65 to 

74 by Income Quintile 16

Table 7: Selected Studies of Retirement Income Adequacy 25

Figures

Figure 1: Select Resources for All Households Age 55 and Older 8

Contents
Page ii GAO-15-419 Retirement Savings

Figure 2: Distribution of Retirement Savings Amounts among 

Households Age 55-64 9

Figure 3: Average Composition of Income for Households Age 65-

74 by Retirement Savings Status 18

Figure 4: Average Composition of Income for Households Age 75 

and Older 20

Figure 5: When Older Workers Plan to Retire Versus When 

Retirees Actually Retired 31

Figure 6: Comparison of Retirement Plans of Older Workers and 

How Retirees Left Their Jobs 33

Abbreviations

DB Defined benefit

DC Defined contribution

EBRI Employee Benefit Research Institute

Federal Reserve Board of Governors of the Federal Reserve System

HRS Health and Retirement Study

ICI Investment Company Institute

IRA Individual retirement account

NRRI National Retirement Risk Index

OASI Old-Age and Survivors Insurance

PBGC Pension Benefit Guaranty Corporation

SCF Survey of Consumer Finances

SSA Social Security Administration

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

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Page 1 GAO-15-419 Retirement Savings

441 G St. N.W.

Washington, DC 20548

May 12, 2015

The Honorable Bernard Sanders

Ranking Member

Subcommittee on Primary Health 

 and Retirement Security

Committee on Health, Education, Labor, and Pensions

United States Senate

Dear Senator Sanders:

Baby boomers, the youngest of whom are now in their 50s, are 

approaching and reaching retirement in waves.1 According to the Census 

Bureau, the age 65-and-over population in 2030 is projected to be about 

74 million – more than 50 percent larger than in 2015, and representing 

more than 20 percent of the projected total U.S. population.2 Several 

issues call attention to the retirement security of this sizeable First, the 

decades-long shift in the private sector away from defined benefit (DB) 

plans (which typically pay lifetime annuity benefits in retirement) to 

defined contribution (DC) plans (which require workers to accumulate 

savings over their careers and manage withdrawals in retirement) means 

that many workers and retirees need more savings to provide a secure 

retirement. In 1991, private-sector DB plans had more participants than 

DC plans. Since then, the number of private-sector DB plans has shrunk 

considerably and the number of participants has remained flat, while the 

number of participants in DC plans has expanded considerably.3

 

1 Baby boomers include the 78 million Americans born from 1946 through 1964.

Longer 

life expectancy means that many baby boomers will spend more years in 

retirement than earlier cohorts and need their savings to last longer. In 

addition, concerns about the long-term financial condition of Social 

Security, which provides the base of financial support for retirees, 

highlight the growing importance of Americans accumulating savings for 

their retirement.

2 U.S. Census Bureau, “Projections of the Population by Sex and Selected Age Groups for 

the United States: 2015 to 2060.” (NP2014-T3), December 2014.

3 U.S. Department of Labor, Employee Benefits Security Administration, “Private Pension 

Plan Bulletin Historical Tables and Graphs.” December 2014. 

Letter
Page 2 GAO-15-419 Retirement Savings

In light of these developments, you asked us to review the financial status 

of workers approaching retirement and current retirees. We examined the 

following questions: 1) What financial resources do workers approaching 

retirement and current retirees have? and 2) What evidence do studies 

and surveys provide about retirement security for workers and retirees? 

To describe the financial resources of current and future retirees, we 

examined financial information from the 2013 Survey of Consumer 

Finances (SCF). Conducted by the Board of Governors of the Federal 

Reserve System (Federal Reserve), the SCF is a triennial national survey 

of assets and income. Throughout the report, we use the term “retirement 

savings” to mean money accrued in account-based DC plans, such as 

401(k) plans, and individual retirement accounts (IRAs). We do not 

estimate the value of DB plans or include such an estimate in retirement 

savings.4

To analyze other evidence of retirement security, we reviewed several 

studies of retirement adequacy and compared and contrasted their 

methodologies and findings. These included academic studies based on 

formal models of optimal saving behavior and consumption patterns, 

studies that projected savings levels in retirement based on recent 

savings data, and other reports examining the levels, adequacy, and 

sources of retirement wealth. In addition, we interviewed authors of 

studies and other retirement experts about retirement readiness. We also 

reviewed relevant questions from surveys of retirees and workers 

approaching retirement age to infer information about their experiences of 

saving for and living in retirement. These questions included those 

regarding financial well-being, confidence in being able to afford a 

comfortable retirement, and expectations of when and how people plan to 

retire. The surveys included the University of Michigan’s Health and 

Retirement Study (HRS), the Federal Reserve’s Survey of Household 

Economics and Decisionmaking, the Employee Benefit Research 

Institute’s Retirement Confidence Survey, and other surveys.

Savings held outside of retirement accounts are included in 

financial assets as non-retirement savings.

For SCF, HRS, and other survey data used in this report, we reviewed 

methodological documentation and, when appropriate, interviewed 

 

4 While we do include DB plan benefits in retirement income, we include them in 

retirement savings only if a household has taken the benefit as a lump sum and rolled it 

into an IRA or other account balance. 
Page 3 GAO-15-419 Retirement Savings

individuals knowledgeable about the data and conducted electronic 

testing. Based on this, we found the data to be reliable for the purposes 

used in this report.

For the purpose of this report, we discuss households and workers 

nearing retirement age, from age 55-64, to isolate near retirees and 

determine retirement readiness, though some of this group may in fact be 

retired. We discuss the age group 65-74 to examine retirees in the first 

stage of retirement, although some members of this group may not be 

retired. Finally, we discuss the age group 75 and older, most of whom we 

expect to be retired. (A more detailed description of our scope and 

methodology is provided in appendix I.)

We conducted this performance audit from April, 2014 to May, 2015 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Income in retirement may come from several sources, including (1) Social 

Security, (2) payments from employment-based DB plans, (3) savings in 

retirement plans, such as in a 401(k) plan or IRA, including the return on 

these savings;

5

(1) Social Security: Social Security pays benefits to retirees, their 

spouses, and their survivors, as well as to some disabled workers. 

According to the Social Security Administration (SSA), as of 2012, 86 

percent of households age 65 and older received Social Security benefits. 

Benefits are paid to workers who meet requirements for the time they 

have worked in “covered employment” – jobs through which workers pay 

Social Security taxes, which cover about 96 percent of U.S. workers, 

and (4) other sources, including non-retirement savings, 

home equity, and wages.

 

5 Income in retirement may also come from earnings or returns on assets from nonretirement accounts, but for the purposes of this report we focus on retirement savings.

Background
Page 4 GAO-15-419 Retirement Savings

according to SSA.6 Workers can claim benefits starting at age 62 (or 

when they become disabled), but for retiring workers the monthly benefit 

they receive increases the longer they delay receiving them, up until age 

70.7

Social Security benefits offer two main advantages: they are a monthly 

stream of payments that continue until death and they adjust annually for 

cost-of-living increases. According to the 2014 report from the Social 

Security Board of Trustees, the Old-Age and Survivors Insurance (OASI) 

trust fund from which Social Security benefits are paid is projected to 

become depleted in 2034, at which point continuing income is projected 

to be sufficient to cover just 75 percent of scheduled benefits.

Monthly Social Security benefits are based on a worker’s earnings 

history and are progressive, meaning that Social Security replaces a 

higher percentage of earnings for lower-income workers and their 

dependents than for higher-income workers.

8

(2) Defined Benefit Plans: these plans are “traditional” employment-based 

pension plans that offer benefits typically determined by a formula based 

on factors specified by the plan, such as salary and years of service. DB 

plans typically offer pension benefits in the form of an annuity that 

provides a monthly payment for life, although some plans also offer a 

lump-sum distribution option. An annuity can help to protect a retiree 

against risks, including the risk of outliving one’s assets (longevity risk), 

and may also offer survivor benefits. However, DB plans carry the risk 

that a plan sponsor may freeze or terminate the plan. If a private-sector 

plan terminates with insufficient assets to pay promised benefits, the 

Pension Benefit Guaranty Corporation (PBGC), a federal government 

corporation, provides plan insurance and pays promised benefits subject 

This 

projection raises the possibility of changes to Social Security benefits, 

taxation, or both before the depletion date.

 

6 About one-fourth of public employees do not pay Social Security taxes on the earnings 

from their government jobs and receive no service credit. Starting in 1984, individuals who 

began working for the federal government pay Social Security taxes and receive service 

credit.

7 Individuals with disabilities who qualify for Social Security Disability Insurance receive 

unreduced benefits even if they claim prior to their full retirement age.

8 The 2014 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors 

Insurance and Federal Disability Insurance Trust Funds (Washington D.C.: Jul. 2014) 
Page 5 GAO-15-419 Retirement Savings

to certain statutory limits, which may result in some beneficiaries getting 

reduced benefits.

(3) Retirement Savings: Introduced over 30 years ago, two primary types 

of retirement savings vehicles currently exist: employment-sponsored DC 

plans (such as 401(k) plans) and IRAs. For both types, benefits accrue in 

the form of account balances, which grow from contributions made by 

workers (and sometimes by their employers) and investment returns. 

Examples of employer-sponsored DC plans include 401(k) plans, 403(b) 

plans, and similar plans for which employers can offer payroll deductions, 

employer contributions to employee accounts, or both. Individuals can 

also save for retirement through IRAs, which allow individuals to make 

contributions for retirement without participating in an employmentsponsored plan.9

Workers and employers who contribute to retirement savings accounts 

generally receive favorable federal tax treatment, such as tax deductions 

for contributions and tax-deferred or even tax-free returns on 

investment.

DC plans and IRAs provide tax advantages, portability 

of savings, and transparency of known account balances. However, they

also place the primary responsibility on individuals to participate in, 

contribute to, and manage their accounts throughout their working 

careers, and to manage their savings throughout retirement in order to 

keep from running out of money.

10

 

9 While the vast majority of IRAs are individual accounts, the Internal Revenue Code also 

provides for “individual retirement annuities,” which are annuity or endowment contracts 

issued by insurance companies and meeting certain requirements. 26 U.S.C. § 408(b).

These tax preferences are one of the largest tax 

expenditures in the federal government. In fiscal year 2012, the estimated 

10 For 2015, individuals can contribute up to $5,500 in IRAs ($6,500 for those age 50 or 

older), while the contribution limit for 401(k) plans is $18,000 ($24,000 for those age 50 or 

older). Contributions to 401(k) plans and traditional IRAs are not subject to tax when made 

(26 U.S.C. §§ 402(e)(3) and 219(a) and (e), respectively); distributions or withdrawals of 

principal or earnings from them are subject to tax (26 U.S.C. §§ 402(a) and 408(c)(1), 

respectively). Contributions to Roth IRAs are not tax-deductible, but after one has been 

established for 5 years, upon reaching age 591⁄2, an individual may make withdrawals of 

principal or earnings not subject to tax. 26 U.S.C. § 408A(c) and (d).
Page 6 GAO-15-419 Retirement Savings

revenue loss associated with these accounts included $51.8 billion for DC 

plans and $16.2 billion for IRAs.11

Employment-based retirement plan coverage, especially in the private 

sector, has shifted from DB to DC plans. According to the Department of 

Labor, as of 2012 private-sector DB plans had almost 40 million 

participants, while DC plans had about 91 million. In contrast, in 1975, 

about three-quarters of private-sector pension participants had DB plans, 

and half of all participants in 1990 had DB plans.12 According to Federal 

Reserve data, as of the third quarter of 2014, U.S. DB plans held about 

$11.2 trillion in assets, IRA assets totaled about $7.3 trillion and DC 

assets accounted for about $6.2 trillion.13 Rollovers from 401(k) plans and 

other employment-sponsored plans are the predominant source of 

contributions to IRAs.14

(4) Other Sources: In addition to the three sources listed above, retirees 

may also have other sources of income, such as earnings or income from 

assets. Retirees may also choose to draw from home equity, for example, 

by selling their home or obtaining a reverse mortgage. Another form of 

income that economists also usually consider is “imputed rent”–the 

market rent households living in owner-occupied housing could charge, 

but forego, if they rented their house.15

 

11 Office of Management and Budget, Fiscal Year 2014 Analytical Perspectives: Budget of 

the U.S. Government (Washington, D.C.: April 10, 2013). The tax expenditure is 

measured as the tax revenue that the government does not currently collect on 

contributions and earnings amounts, offset by the taxes paid on plan distributions to those 

who are currently receiving retirement benefits.

Earnings from work can also be 

12 These figures may double-count individuals who have both a DB and DC plan. U.S. 

Department of Labor, Employee Benefits Security Administration, “Private Pension Plan 

Bulletin Historical Tables and Graphs.” December 2014.

13 These figures include assets in private-sector and public-sector pension plans. Board of 

Governors of the Federal Reserve System, “Financial Accounts of the United States: Flow 

of Funds, Balance Sheets, and Integrated Macroeconomic Accounts, Fourth Quarter 

2014.” (Washington, D.C.: March 12, 2015.).

14 GAO, 401(K) Plans: Labor and IRS Could Improve the Rollover Process for 

Participants, GAO-13-30 (Washington, D.C.: March 7, 2013).

15 Considering imputed rent income treats owner-occupied housing neutrally compared to 

renter-occupied housing. For example, consider two homeowners who each live in their 

homes and pay a $1,000 mortgage. If they moved into each other’s home and received 

$1,000 per month rent, that $1,000 would be considered income, even though nothing has 

changed about either household’s balance sheet or net expenses.
Page 7 GAO-15-419 Retirement Savings

an important source of income for some households with a member age 

65 or older, especially for those with a spouse younger than 62 who is not 

yet eligible to receive Social Security benefits.

According to our analysis of data from the 2013 SCF, 52 percent of

households age 55 and older have no retirement savings in a DC plan or 

IRA, and Social Security provides most of the retirement income for about 

half of households age 65 and older.16 Among the 48 percent of 

households age 55 and older with some retirement savings, the median 

amount is approximately $109,00017–commensurate to an inflationprotected annuity of $405 per month at current rates for a 65-year-old.18

 

16 For the SCF estimates in this report, we define household age as the age of the 

household head. For purposes of data organization, the Federal Reserve considers the 

household head to be the male within a mixed-sex couple and the older individual within a 

single-sex couple. All percentage estimates based on the SCF have 95 percent 

confidence intervals of within 3 percentage points of the estimate, and all dollar estimates 

have confidence intervals within 5 percent of the estimate itself.

Households that have sizeable retirement savings are more likely than 

households with lower saving to have other resources, including a higher 

likelihood of expecting retirement income from a DB plan. Nearly 30 

percent of households age 55 and older have neither retirement savings 

nor a DB plan (see fig. 1). Social Security remains the largest component

of household income in retirement, making up an average of 52 percent 

of household income for those age 65 and older.

17 We are 95 percent confident that the median retirement savings amount among those 

with savings is between $96,889 and $121,911.

18 We calculated an inflation-protected single-life annuity equivalent for a 65-year-old 

commencing payments immediately using the Retirement Income Calculator from the 

Federal Thrift Savings Plan website (www.tsp.gov), which assumed an interest rate of 2 

percent as of the calculation date. In 2011, we found that few retiring workers with DC 

plans chose or purchased an annuity. See GAO, Retirement Income: Ensuring Income 

throughout Retirement Requires Difficult Choices, GAO-11-400 (Washington, D.C.: June 

7, 2011).

About Half of Older 

Households Have No 

Retirement Savings, 

and Many Rely on 

Social Security
Page 8 GAO-15-419 Retirement Savings

Figure 1: Select Resources for All Households Age 55 and Older

Note: For households with no DB plan or retirement savings, we are 95 percent confident that the 

median financial asset value was between $763 and $1,237, the median annual income was between 

$17,809 and $20,055, and the median net worth was between $25,227 and $44,293. All other 

estimates in this figure have confidence intervals within +/- 3 percentage points.

About 55 percent of households age 55-64 have less than $25,000 in 

retirement savings, including 41 percent who have zero (see fig. 2 for 

additional detail). Most of the households in this age group have some 

other resources or benefits from a DB plan, but 27 percent of this age 

group have neither retirement savings nor a DB plan.

Over Half of Households 

Age 55 to 64 Have Little or 

No Retirement Savings, 

and Many of These Have 

Few Other Financial 

Resources
Page 9 GAO-15-419 Retirement Savings

Figure 2: Distribution of Retirement Savings Amounts among Households Age 55-

64

Note: Savings amounts are expressed in 2013 dollars. The sum of the percentages of households 

with more than zero but less than $50,000 may not add up to 20 percent because of rounding. All 

estimates in this figure have 95 percent confidence intervals within +/- 3 percentage points.

Among households age 55-64, the 41 percent with no retirement savings 

have few other financial resources but they are less likely to have debt 

than those with retirement savings.19

 

19 Debt includes housing debt (such as mortgages or home equity lines of credit), credit 

card balances, installment loans, and other lines of credit. 

For example, around 85 percent 

have less than $25,000 in total financial assets, such as in savings 

accounts or non-retirement investments. Compared to those with 

retirement savings, these households have about a third of the median 

income, about one-fifteenth of the median net worth, and are less likely to 

be covered by a DB plan (see table 1). Regarding debt, households 

without retirement savings are less likely to have debt than households 

with savings (about 70 percent compared to 84 percent). Their debt levels 

are comparable, though, as about 20 percent of households from each 

Four in Ten Households Age 

55-64 Have No Retirement 

Savings and Few Other 

Resources
Page 10 GAO-15-419 Retirement Savings

category have debt amounts that are more than twice their annual 

income.

Table 1: Select Resources for Households Age 55-64 by Ownership of Retirement 

Savings 

Dollar figures rounded to nearest $1,000

Households age 55-64 with 

no retirement savings

Households age 55-64 

with retirement savings

Percent of households age 55-

64 41% 59%

Median net worth $21,000 $337,000 

Median non-retirement 

financial resources $1,000 $25,000 

Median income $26,000 $86,000

Home ownership rates 56% 87%

Percent who own a home that 

is paid off 22% 27%

Percent with a defined benefit

plan 32% 45%

Source: GAO analysis of 2013 Survey of Consumer Finances data. | GAO-15-419

Note: We are 95 percent confident that median net worth for households with no retirement savings is 

between $13,668 and $28,536, that median non-retirement financial resources is between $795 and 

$1,205, and that median income is between $23,422 and $27,646. For households with some 

retirement savings, the median net worth is between $284,813 and $389,599, the median nonretirement financial resources is between $19,672 and $29,928, and the median income is between 

$81,646 and $91,230. All other estimates in this table have 95 percent confidence intervals within +/- 

3 percentage points. The percent of households with DB plan includes those where the respondent 

and/or the respondent’s spouse/partner has a DB plan from a current or past job.

Perhaps of greatest concern are the 27 percent of all households age 55-

64 that have neither retirement savings nor a DB plan. Their median net 

worth is about $9,000,20 and 91 percent have less than $25,000 in 

financial assets. These households’ median home equity is about 

$53,000,21

 

20 We are 95 percent confident that the median net worth is between $6,469 and $12,169.

which is less than half of what households with retirement 

savings or a DB plan have.

21 We are 95 percent confident that the median home equity is between $42,174 and 

$63,026.

About a Quarter of Households 

Age 55-64 Have No 

Retirement Savings and No DB 

Plan
Page 11 GAO-15-419 Retirement Savings

Not surprisingly, they have approximate median income of $21,000.22

About half of these households had wage or salary income,23 compared 

to 82 percent of households age 55-64 with some retirement savings or a 

DB plan. This indicates that a smaller portion of these households are 

likely working, which may limit their ability to accumulate retirement 

savings. About 46 percent had Social Security income, indicating that 

they may have claimed before the full retirement age and would receive 

reduced monthly benefits.24

For the 59 percent of households age 55-64 with some retirement 

savings, we estimate that the median amount saved is about $104,000,25

which is equivalent to an insured, inflation-protected annuity of $310 per 

month for a 60-year-old.26 While about 15 percent of these households 

have retirement savings amounts over $500,000, 11 percent have 

retirement savings below $10,000 and 24 percent have savings of less 

than $25,000 (see table 2 for additional detail). A savings amount of 

$25,000 is equivalent to an insured, inflation-protected annuity of $74 per 

month for a 60-year-old.27

 

22 We are 95 percent confident that the median income is between $19,146 and $22,484. 

23 We are 95 percent confident that between 49 and 57 percent had wage income.

24 We are 95 percent confident that between 41 and 51 percent had Social Security 

income, which could include retirement, disability, survivors, or dependent’s benefits. 

Eligible workers can claim Social Security retirement benefits as early as age 62, but the 

monthly benefit is lower for the rest of a retiree’s life than if they delayed claiming. Full 

retirement age ranges from 65 to 67, depending on birth year. 42 U.S.C. § 416(l). As we 

reported in 2014, early Social Security claimers have less income and wealth in retirement 

and receive a larger share of their income from Social Security than those who delay 

claiming until their full retirement age. GAO, Retirement Security: Challenges for Those 

Claiming Social Security Benefits Early and New Health Coverage Options, GAO-14-311

(Washington, D.C.: April 23, 2014).

25 We are 95 percent confident that the median retirement savings amount is between 

$88,483 and $120,197.

26 We calculated an inflation-protected single-life annuity equivalent for a 60-year-old 

commencing payments immediately using the Retirement Income Calculator from the 

Federal Thrift Savings Plan website (www.tsp.gov), which assumed an interest rate of 2 

percent as of the calculation date. 

27 Ibid. 

Six In Ten Households Age 55-

64 Have Some Retirement 

Savings
Page 12 GAO-15-419 Retirement Savings

Table 2: Distribution of Retirement Savings Amounts among Households with 

Some Retirement Savings, Age 55-64 

10th 

percentile

25th 

percentile

50th 

percentile

75th 

percentile

90th 

percentile

Retirement 

Savings $8,760 $25,978 $104,340 $300,200 $718,200 

Source: GAO analysis of 2013 Survey of Consumer Finances data. | GAO-15-419

Note: We are 95 percent confident that the 10th percentile amount is between $6,495 and $11,025, 

the 25th percentile amount is between $19,268 and $32,688, the 50th percentile amount is between 

$88,483 and $120,197, the 75th percentile amount is between $244,073 and $356,327, and the 90th 

percentile amount is between $586,956 and $849,444.

Both retirement savings and DB plan coverage rises with income levels 

for age 55-64 households (see table 3).28

Table 3: Select Retirement Resources for Households Age 55-64 by Income Quintile 

Across income quintiles, a 

similar percentage of households have a paid-off mortgage and debt 

levels above twice their income, whereas retirement savings and DB plan 

coverage generally increase with income.

Dollar figures rounded to nearest $1,000

1 (bottom) 2 3 4 5 (top)

Percent with retirement 

savings 9% a 42% 68% 84% 94% 

Among those who have, 

median retirement savings — a $19,000 $68,000 $97,000 $371,000

Percent with a defined benefit

plan 18% b 35% 43% 53% 50% 

Percent who own a home that 

is paid off 21% 28% 24% 25% 29% 

Percent with debt greater than 

twice annual income 17% 26% 24% 21% 14% 

Source: GAO analysis of 2013 Survey of Consumer Finances data. | GAO-15-419

Note: For all percentage estimates in this table, the 95 percent confidence intervals are within +/- 6 

percentage points.

a

Because of sample size, we could not produce a reliable estimate for the bottom quintile. We are 95

percent confident that the median retirement savings for the 2nd quintile is between $10,334 and 

$27,666, the 3rd quintile is between $49,909 and $86,171, the 4th quintile is between $73,479 and 

$119,921, and the 5th quintile is between $281,513 and $460,087.

b

 

28 We found SCF estimates of future income from DB plans to be unreliable for our 

purposes. 

The percent of households with a DB plan includes those where the respondent and/or the 

respondent’s spouse/partner has a DB plan from a current or past job.
Page 13 GAO-15-419 Retirement Savings

Turning to older households, retirement savings among those age 65-74 

shows a distribution similar to those age 55-64, though a larger proportion 

has no retirement savings (52 percent).29 Similar to the younger group, 

about 10 percent have more than $500,000 in savings.

Another similarity is that many households age 65-74 with no retirement 

savings have few other resources to draw upon in retirement as 

measured by our indicators (see table 4). Compared to those in the same 

age group with retirement savings, households without retirement savings 

have about one-seventh the net worth, and fewer have a DB plan. Unlike 

households age 55-64, the debt profile for households without retirement 

savings is not substantially better than for households with some 

retirement savings.

 

29 We would expect most households in this age group who have retirement savings to 

have begun drawing these down, although balances can still grow from contributions and 

investment returns.

Half of Households Age 

65-74 Have No Retirement 

Savings, and Social 

Security is the Largest 

Source of Retirement 

Income for This Age Group

About Half of Households Age 

65-74 Have No Retirement 

Savings
Page 14 GAO-15-419 Retirement Savings

Table 4: Select Resources for Households Age 65-74 by Ownership of Retirement 

Savings 

Dollar figures rounded to nearest $1,000

Households age 65-74 with 

no retirement savings

Households age 65-74 

with retirement savings

Percent of households age 

65-74 52% 48%

Median net worth $86,000 $597,000

Median non-retirement 

financial resources $4,000 $79,000

Home ownership rates 77% 95%

Percent who own a home 

that is paid off 36% 51%

Percent with a defined 

benefit plan 49% 58%

Source: GAO analysis of 2013 Survey of Consumer Finances data. | GAO-15-419

Note: Percentage estimates in this table have 95 percent confidence intervals that are within +/- 5 

percentage points. For households with no retirement savings, we are 95 percent confident that the 

median net worth is between $70,841 and $100,675, the median non-retirement financial resources is 

between $2,539 and $5,385. For households with some retirement savings, we are 95 percent 

confident that the median net worth is between $483,261 and $711,607, median non-retirement 

financial resources is between $61,878 and $95,922. The percent of households with a DB plan 

includes those where the respondent and/or the respondent’s spouse/partner has a DB plan from a 

current or past job.

Similar to households age 55-64, a closer look at the 27 percent of 

households age 65-74 with no retirement savings and no DB plan reveals 

that they have very low levels of resources to draw upon for retirement 

income. This group has a median net worth of about $57,000,30 which is 

around one-sixth the net worth of other households of this age. Compared 

to households with some retirement savings or a DB plan, households in 

this age group generally have lower home ownership rates (about 67 

percent compared to 93 percent) and less home equity when they do own 

homes (median home equity is about $100,000, compared to 

$148,000).31

 

30 We are 95 percent confident that the median net worth is between $30,821 and 

$83,789.

31 For households with neither retirement savings nor DB plans, we are 95 percent 

confident that between 62 and 73 percent own a home and their median home equity is 

between $81,551 and $118,449. For other households, we are 95 percent confident the 

median is between $139,628 and $156,772.

A Quarter of Households Age 

65-74 Have No Retirement 

Savings and No DB Income
Page 15 GAO-15-419 Retirement Savings

For the 48 percent of households age 65-74 that have some retirement 

savings, we estimate that the median amount is $148,000,32 comparable 

to an insured, inflation-protected annuity of $649 per month for a 70-yearold at current rates.33 About one in five of these households has 

retirement savings amounts over $500,000, while 16 percent have 

savings less than $25,000 (see table 5 for additional detail).34

Table 5: Distribution of Retirement Savings Amounts among Households with 

Some Retirement Savings, Age 65-74 

10th 

percentile

25th 

percentile

50th 

percentile

75th 

percentile

90th 

percentile

Retirement 

savings $16,800 $48,800 $148,000 $394,200 $1,112,400 

Source: GAO analysis of 2013 Survey of Consumer Finances data. | GAO-15-419

Note: We are 95 percent confident that the 10th percentile amount is between $9,644 and $23,956, 

the 25th percentile amount is between $36,999 and $60,601, the 50th percentile amount is between 

$123,799 and $172,201, the 75th percentile amount is between $306,096 and $482,304, and the 90th 

percentile amount is between $885,356 and $1,339,444.

For all households age 65-74, median annual income is about $47,00035

and Social Security makes up on average 44 percent of income for 

households in this age group, larger than any other income source. About 

90 percent of all households in this age range receive some Social 

Security income, and the median amount they receive is approximately 

$19,000.36

 

32 We are 95 percent confident that the retirement savings amount is between $123,799 

and $172,201.

About 41 percent of households in this age range rely on 

Social Security for over half of their income, while 14 percent rely on 

Social Security for more than 90 percent of their income. While Social 

Security is, on average, the largest component of household income in 

retirement, other sources also play a role in funding retirement for 

33 We calculated an inflation-protected single-life annuity equivalent for a 70-year-old 

commencing payments immediately using the Retirement Income Calculator from the 

Federal Thrift Savings Plan website (www.tsp.gov), which assumed an interest rate of 2 

percent as of the calculation date.

34 We are 95 percent confident that between 13 and 20 percent of households age 65-74 

with some retirement savings have less than $25,000. 

35 We are 95 percent confident that median income is between $44,244 and $50,706.

36 We are 95 percent confident that the median Social Security income is between 

$18,071 and $20,041.

Households Age 65-74 with 

Some Retirement Savings

About Forty Percent of 

Households Age 65-74 Get

Most of their Income from 

Social Security
Page 16 GAO-15-419 Retirement Savings

households age 65-74. Income from work and pension-based annuities, 

such as DB plans, contribute about a fifth of household income each, on 

average. Distributions from retirement savings make up a relatively small 

portion of average household income at 4 percent. Because Social 

Security and DB plans represent a relatively large portion of retiree 

income, it follows that much of the household income for this age group 

has some assurance that it will last a lifetime.

Among households age 65-74, the prevalence of both retirement savings 

and DB plans generally increases with income (see table 6). As with the 

younger age group, not only do a larger proportion of higher-income 

households have some retirement savings, but the amount they have 

saved is also larger. Similarly, the annual amount they receive from their 

DB plan increases with income.

Table 6: Select Retirement Resources for Households Age 65 to 74 by Income 

Quintile 

Dollar figures rounded to nearest $1,000

First (bottom) Second Third Fourth Fifth (top)

Percent with retirement 

savings 9% 33% 48% 65% 84%

Among those who have, 

median retirement 

savings — a — $104,000 $144,000 $468,000

Percent with a defined 

benefit (DB) plan 19% b 46% 67% 68% 65% 

Among those with DB 

income, median annual 

amount $4,000 c $11,000 $17,000 $24,000 $37,000

Percent who own a home 

that is paid off 44% 50% 40% 44% 39% 

Percent with debt greater 

than twice annual income 17% 17% 27% 14% 10% 

Source: GAO analysis of 2013 Survey of Consumer Finances data. | GAO-15-419

Note: For all percentage estimates in this table, the 95 percent confidence intervals are within +/- 8 

percentage points.

a

Because of sample size, we could not produce a reliable estimate for the bottom two quintiles. We 

are 95 percent confident that the median retirement savings for the 3rd quintile is between $66,041 

and $142,359, the 4th quintile is between $114,070 and $172,730, and the 5th quintile is between 

$345,986 and $590,414.

b

The percent of households with a DB plan includes those where the respondent and/or the 

respondent’s spouse/partner has a DB plan from a current or past job.

c

We are 95 percent confident that the median DB income for the 1st quintile is between $2,242 and 

$6,446, for the 2nd quintile is between $8,484 and $12,876, for the 3rd quintile is between $13,910 

and $19,210, the 4th quintile is between $17,902 and $30,146, and the 5th quintile is between 
Page 17 GAO-15-419 Retirement Savings

$25,560 and $47,640. DB income includes income from DB plans and any annuitized DC plans. 

Social Security makes up a larger share of household income for 

households with no retirement savings, which is not surprising as these 

households have lower incomes. The 52 percent of households age 65-

74 with no retirement savings rely primarily on Social Security for income 

in retirement, as it makes up 57 percent of their household income on 

average (see figure 3). These households have median income of 

approximately $29,000, and 25 percent of them rely on Social Security for 

more than 90 percent of their income.37 Those in the same age range 

who have some retirement savings have a median income of $76,000.38

Social Security makes up on average 31 percent of income for those with 

savings, about the same percentage that wage or salary income 

contributes.39 Reflecting Social Security’s progressive benefit structure, 

86 percent of those in the lowest income quintile receive more than half of 

their household income from Social Security, while 66 and 44 percent of 

those in the second and third quintiles do, respectively.

40

 

37 We are 95 percent confident that the median income is between $26,132 and $32,654 

and that between 21 and 28 percent relied on Social Security for more than 90 percent of 

their income. The 2012 poverty threshold for a two-adult household age 65 and older was 

$13,878. 

38 We are 95 percent confident that the median income is between $64,594 and $87,150.

39 While wage or salary income makes up, on average, 30 percent of household income 

among this population, we are 95 percent confident that between 52 and 59 percent of 

these households had wage or salary income. For comparison, we are 95 percent 

confident that between 27 and 35 percent of households with no retirement savings had 

wage or salary income. 

40 We are 95 percent confident that the figures are between 81 and 91 percent, 57 and 74 

percent, and 37 and 51 percent, respectively. 
Page 18 GAO-15-419 Retirement Savings

Figure 3: Average Composition of Income for Households Age 65-74 by Retirement Savings Status

Note: Other includes income from non-retirement investments, such as interest, dividends, mutual 

funds, stocks, and bonds. It also includes rental income, real estate, child support, alimony, and 

business/farm income. Public assistance includes income from unemployment or worker’s 

compensation, and programs such as Temporary Assistance for Needy Families or Supplemental 

Security Income. Retirement savings distributions do not include annuity equivalents from assets 

remaining in the plan. Sums may not add up to 100 because of rounding. All estimates in this figure 

have 95 percent confidence intervals within +/- 3 percentage points.

Households age 65-74 with no retirement savings or DB plan have about 

one-third the income of other households in the same age group and are 

even more likely to rely on Social Security. Specifically, their median 

income is about $19,000 compared to $60,000 for the other group.41

 

41 We are 95 percent confident that income for households with neither retirement savings 

nor DB plan is between $16,728 and $20,684. For other households it is between $56,092 

and $63,852.

Only 

about a quarter of these households have wage income, compared to 49 

percent of other households in this age range, while 45 percent of them 

relied on Social Security for over 90 percent of their income, compared to 
Page 19 GAO-15-419 Retirement Savings

3 percent for households with either some retirement savings or a DB 

plan.42

Households age 75 and older have even fewer retirement assets than 

younger households, and only 29 percent have retirement savings. About 

35 percent have neither retirement savings nor a DB plan, though a larger 

percentage of households in this age group have a DB plan than those 

nearing retirement (55 percent compared to 40 percent for households 

age 55-64). Of those households that have savings, the median savings 

is approximately $69,000,43 which is commensurate to an insured, 

inflation-protected annuity of $467 per month at current rates for an 80-

year-old.44

Social Security provides the bulk (on average 61 percent) of household 

income for those 75 and older (see fig. 4). The median income for 

households age 75 and older is about $27,000, and the median Social 

Security income is approximately $17,000.45 When compared to younger 

households age 65-74, Social Security makes up a larger share of 

household income for retirees age 75 and older, with 62 percent of these 

households relying on Social Security for more than 50 percent of their 

income, and 22 percent relying on Social Security for more than 90 

percent of their income.46

 

42 Among households with neither retirement savings nor a DB plan, we are 95 percent 

confident that between 20 and 30 percent had wage income and that Social Security 

made up more than 90 percent of income for between 39 and 50 percent of them. 

Moreover, according to Census data, about 43 

43 We are 95 percent confident that the retirement savings amount is between $49,199 

and $88,801.

44 We calculated an inflation-protected single-life annuity equivalent for an 80-year-old 

commencing payments immediately using the Retirement Income Calculator from the 

Federal Thrift Savings Plan website (www.tsp.gov), which assumed an interest rate of two 

percent as of the calculation date.

45 We are 95 percent confident that median income is between $25,626 and $29,184 

while Social Security income is between $15,617 and $17,983. About 98 percent of 

households age 75 and older had income from Social Security. 

46 We are 95 percent confident that between 58 and 65 percent rely on Social Security for 

more than 50 percent of their income. 

Most Households Age 75 

and Older Have No 

Retirement Savings and 

Social Security Provides 

Most Household 

Retirement Income on 

Average
Page 20 GAO-15-419 Retirement Savings

percent of people 65 years and older would have incomes below the 

poverty level if they did not receive Social Security.47

Figure 4: Average Composition of Income for Households Age 75 and Older

Note: Other includes income from non-retirement investments, such as interest, dividends, mutual 

funds, stocks, and bonds. It also includes rental income, real estate, child support, alimony, and 

business/farm income. Public assistance includes income from unemployment or worker’s 

compensation, and programs such as Temporary Assistance for Needy Families or Supplemental 

Security Income. Retirement savings plan distributions do not include annuity equivalents from assets 

remaining in the plan. Sums may not add up to 100 because of rounding. All estimates in this figure 

have 95 percent confidence intervals within +/- 3 percentage points.

As with the younger age groups, households age 75 and older with no 

retirement savings have fewer resources based on our indicators than 

those with some retirement savings, as one might expect. For example, 

their median net worth is about $127,000, compared to $435,000 for 

same-aged households with some retirement savings.48

 

47 U.S. Bureau of the Census. Current Population Survey, Annual Social and Economic 

Supplements, “Impact on Poverty of Alternative Resource Measures by Age: 1981 to 

2013,” accessed March 27, 2015 from 

Additionally, 

http://www.census.gov/hhes/www/poverty/data/incpovhlth/2013/Impact_Poverty.xls. 

48 We are 95 percent confident that the median net worth for households with no 

retirement savings is between $107,366 and $147,194, while for other households it is 

between $354,804 and $515,952.
Page 21 GAO-15-419 Retirement Savings

households with no retirement savings have lower homeownership rates 

than other households in the same age range (75 percent compared to 93 

percent) and a smaller proportion own their homes outright (55 percent 

compared to 74 percent).49

Similarly, households age 75 and older with no retirement savings have 

lower median incomes than those with some retirement savings. 

Specifically, they have about half the median income as households with 

some retirement savings (about $24,000, compared to $47,000).

A larger share of households in this age range 

have paid off their mortgages than have younger groups.

50

Retirement savings distributions contribute, on average, about 17 percent 

of household income among those with some retirement savings, adding 

a median amount of $4,000 to these households’ income.51 Households 

with retirement savings in this age group obtain just under half their 

income from Social Security on average (46 percent).52

 

49 We are 95 percent confident that between 51 and 58 percent of households with no 

retirement savings own their home with no debt, while between 70 and 79 percent of other 

households do. 

50 We are 95 percent confident that the median income for households with no retirement 

savings is between $22,041 and $25,015, while it is between $39,833 and $53,729 for 

other households. 

51 This amount represents the median amount of retirement savings plan distributions 

among households that had some retirement savings, regardless of whether they 

withdrew from these savings accounts. We are 95 percent confident that retirement 

savings distributions contribute between 13 and 21 percent of these households’ income 

while the median amount is between $2,434 and $6,494.

52 We are 95 percent confident that Social Security contributes between 42 and 50 

percent of these households’ income on average. 
Page 22 GAO-15-419 Retirement Savings

Economists broadly agree that a conceptual benchmark measure for 

adequate retirement saving is an amount that will, along with other 

sources of retirement income, allow a household to maintain its preretirement standard of living into retirement. However, there is no 

consensus about how much income this standard requires. Economists 

and financial planners generally agree that many retirees do not need to 

replace 100 percent of working income in order to maintain their standard 

of living because most retirees probably have reduced expenses—for 

example, no longer needing to provide for payroll taxes, retirement 

saving, and commuting expenses—relative to when they were working. 

Other big expenses that many households may face while working but not 

while retired include the cost of raising children (who are likely grown and 

financially independent by the parents’ retirement age) and of housing if 

homeowners pay off their mortgage by retirement. Conversely, health 

costs may represent a greater expense for a household in retirement than 

while working.

Setting a specific target for, and even calculating, the “replacement rate”–

a household’s post-retirement income as a percentage of pre-retirement 

income–required to maintain a household’s standard of living requires 

many complicated assumptions.53

 

53 For a study of the complexity and limitations of figuring replacement rates, see 

MacDonald, B-J. and K. D. Moore. 2011. “Moving Beyond the Limitations of Traditional 

Replacement Rates.” Society of Actuaries. 

There is broad agreement over some 

aspects of replacement rates, at least in concept if not necessarily in 

practical application to calculations. Because higher-income households 

tend to pay a higher percentage of their income in taxes and save more 

http://www.soa.org/research/researchprojects/pension/default.aspx.

Studies and Surveys 

Provide Mixed 

Evidence on the 

Adequacy of 

Retirement Savings 

among Workers and 

Retirees

Studies of Retirement 

Savings and Income 

Adequacy Conclude 

Different Things about 

U.S. Retirement Security, 

Largely Because of 

Different Savings Targets
Page 23 GAO-15-419 Retirement Savings

for retirement while working, they generally require a lower replacement 

rate in retirement when these expenses decline; for the opposite reasons, 

lower-income households generally require higher replacement rates. For 

these reasons, there is no single replacement rate that represents a 

“success” for retirement income.

Several studies have attempted to evaluate the adequacy of retirement 

income or project the likelihood of current workers having sufficient 

retirement income.54 Some of these studies attempt to judge the 

retirement readiness of workers by using data on consumption, income, 

and wealth for working-age households and projecting a replacement rate 

at retirement; they then compare this projection to a target replacement 

rate that they estimate to be enough to maintain a standard of living in 

retirement. As Table 7 shows, different studies use different replacement 

rate or other benchmarks for retirement income adequacy. The Center for 

Retirement Research at Boston College produces a National Retirement 

Risk Index (NRRI) based on data from the 2013 SCF and concluded that 

52 percent of households faced risk of having insufficient retirement 

income to maintain their standard of living. This percentage is almost the 

same as the one calculated from the 2010 SCF and is up from 44 percent 

in 2007.

55

The Employee Benefit Research Institute (EBRI) uses its Retirement 

Security Projection Model to project the percentage of workers at risk of 

having retirement income that is inadequate to cover minimum retirement 

However, at-risk percentages vary considerably by sub-group 

in the NRRI. For example, Boston College calculates that 60 percent of 

households with income in the lowest third of the income distribution are 

at risk, and 43 percent of households in the highest-third are at risk of 

having insufficient retirement income to maintain their pre-retirement 

standard of living. The NRRI also finds a greater percentage of 

households age 30-39 at risk than age 50-59.

 

54 Some studies focus on retirement savings amounts while others speak more in terms of 

retirement income. Throughout this section we assume that all forms of usable retirement 

wealth can be used to finance consumption in retirement, without necessarily making 

assumptions about the decision to annuitize lump-sum assets or to convert home equity to 

liquid financial assets. For citations for all the studies in this section, please see app. II.

55 Boston College defines a household at risk if their projected replacement rate falls at 

least 10 percent below their target replacement rate for their income group. 
Page 24 GAO-15-419 Retirement Savings

expenditures.56

The 2015 National Institute on Retirement Security (NIRS), instead of 

using a projection model, uses the 2013 SCF to compare net worth 

among workers to financial industry-suggested savings benchmarks at 

different ages. NIRS finds that approximately two-thirds of workers have 

savings below the suggested benchmark, enough for an 85 percent 

replacement rate target at age 67. A 2012 Urban Institute study focuses 

on Baby Boom workers and retirees and sets a 75 percent replacement 

rate target, but measures retirement income at age 70. Depending on 

alternative assumptions they made about whether retirees annuitized 

retirement assets and how they calculated pre-retirement income, they 

find about 30 to 40 percent of their sample fell short of their replacement 

rate target.

EBRI’s projections show about 44 percent of their sample 

falling short of target retirement income. However, EBRI’s projections 

show a much higher percentage of lower-income households at risk of 

falling short on retirement income: 12.5 percent of those born 1948-1954 

in the highest-income quartile compared to 86.8 percent of the same 

cohort in the lowest-income quartile. In a 2012 study, Aon Hewitt projects 

savings of its sample against a target 85 percent replacement rate and 

estimates that 85 percent of workers will fail to hit this target by age 65. 

Even when focusing on “full career” workers who have the potential to 

contribute to a retirement account for at least 30 years, 71 percent of 

these workers still are projected to fall short of the benchmark.

57

 

56 EBRI defines this measure as a set of expenses, varying by income, from the 

Consumer Expenditure Survey, in addition to some health insurance and out-of-pocket 

health expenses, plus stochastic expenses from nursing home and home health care.

57 The Urban Institute’s first method for calculating future retirement income counts 

income from assets, money withdrawn from retirement accounts, and income from Social 

Security, pensions, and earnings. The second assumes retirees annuitize 80 percent of all 

financial assets in addition to income from Social Security, pensions, and earnings. The 

second method yields results in which more retirees meet the 75 percent replacement rate 

target.
Page 25 GAO-15-419 Retirement Savings

Table 7: Selected Studies of Retirement Income Adequacy 

Organization (year of 

study)

Retirement adequacy benchmark 

(replacement rate unless 

otherwise specified) 

Percentage of sample projected 

to be below benchmark Other notes and statistics 

Aon Hewitt (2012) 85%, or 11 times pay at age 65. 85% of sample, including 71% of 

employees with potential to 

participate in employer plan for 30 

years.

Estimates that savings shortfall 

relative to target for full-career 

contributing employee is 2.2 

times pay. 

Biggs-Schieber (2014) Able to maintain standard of living 

in retirement, but no specific target 

stated

N/A For those who work to full 

retirement age, Social Security 

typically replaces 62 percent of 

final-average earnings; income 

from 401(k)’s and IRA’s 

underreported by SSA.

Center for Retirement 

Research at Boston 

College (2014)

69% for highest-third income, 72% 

for middle, 79%, for lowest.

52% overall; 60% of low-income 

and 43% of high-income 

households.

Projects retirement income at 

age 65. Assumes annuitization 

of wealth, including housing 

equity. 

Employee Benefit 

Research Institute (2012)

Sufficient to meet basic expenses, 

including health expenses, 

throughout retirement.

44% of 1948-1954 birth cohorts; 

87% of lowest income quartile, 

13% of highest income 

Assumes age-65 retirement. 

Assumes housing equity 

converted to savings only when 

other resources are exhausted.

Hurd-Rohwedder (2012) Enough resources to maintain preretirement consumption and die 

with bequeathable assets 

30% of age 66-69-year-olds; 23% of 

married households, 51% of single 

persons

Estimate consumption 

trajectories based on preretirement consumption. 

Assumes housing wealth not 

depleted until other forms of 

wealth are. Lowest rates of 

preparedness for people with 

shortest financial planning 

horizons and with least 

education.

National Institute on 

Retirement Security 

(2015)

85%, or 8 times income at age 67 66% of working households age 

25-64; 70% of age 55-64 

households. 

Estimates that 62.4% of 

households age 55-64 fall short 

of target using a 25% lower 

savings goal. 

Investment Company 

Institute (2012)

Able to maintain standard of living 

in retirement, but no specific target 

stated.

N/A Declining poverty rates of 65-

and-older population, and 

smaller percentage of 65-andolder in poverty than 18-64; 

Social Security and housing 

equity comprise key 

components for lower-wealth 

workers; most 55-64 year olds 

covered by some pension 

wealth
Page 26 GAO-15-419 Retirement Savings

Organization (year of 

study)

Retirement adequacy benchmark 

(replacement rate unless 

otherwise specified) 

Percentage of sample projected 

to be below benchmark Other notes and statistics 

Scholz-SeshadriKhitatrakun (2006)Wealth consistent with predictions 

of lifecycle model. 

16% of households overall; 30% 

of lowest-income decile, 5% of 

highest-income decile

Sample from 1992 wave of the 

Health and Retirement Study. 

Progressive Social Security 

benefits, other transfers, and 

children leaving household 

account for much of lowerincome savings adequacy. 

Urban Institute (2012) 75% replacement rate at age 70. 30-40% of 1956-65 birth cohorts Calculates working-years 

income using age 50-54 income 

and 35 years highest earnings.

Source: GAO analysis of studies listed. See app. II for bibliographic information on studies. | GAO-15-419

Other studies have somewhat more optimistic conclusions about whether 

American workers are likely to have enough income in retirement to 

maintain their standard of living. A 2006 study by Scholz, Seshadri, and 

Khitatrakun uses the Health and Retirement Study to compare individuals’ 

earnings and savings history against wealth predictions of a lifecycle 

model over a household’s lifetime, with different targets for different 

household characteristics.58

 

58 A lifecycle model of saving in economics tries to explain patterns of consumption and 

saving over an individual or household’s lifetime. The model generally predicts that 

individuals seek to smooth consumption over their lives, leading to a prediction of 

borrowing during younger years, saving during middle-age years, and living off 

accumulated savings in retirement. 

They find that only 16 percent of households 

have savings below the predictions of their model. Their findings 

emphasize the impact of children and the progressive benefit structure of 

Social Security, which replaces a higher percentage of income for lowerincome earners than higher-income earners, as key factors explaining 

how such a high percentage of households can reach retirement income 
Page 27 GAO-15-419 Retirement Savings

adequacy.59

A 2012 study from the Investment Company Institute (ICI) and a 2014 

study by Andrew Biggs and Sylvester Schieber also express doubt that 

Americans are not saving adequately for retirement, although they do not 

set an adequacy benchmark based on replacement rate or standard of 

living targets against which to measure household savings. ICI argues 

that a “five-tiered pyramid” of retirement assets, made up of Social 

Security, employment-based DB and DC pensions, IRAs, housing equity, 

However, even with these factors, Scholz, Seshadri, and 

Khitatrakun find that the percentage of households with adequate 

retirement income declines with earnings: about 30 percent of lowestdecile earners undersave in their estimation, compared to 5 percent of the 

highest decile. A 2012 study by Hurd and Rohwedder similarly uses a 

lifecycle framework that estimates consumption paths of Health and 

Retirement Study households, based on consumption in the years prior to 

retirement, and projects which households have enough financial 

resources to maintain this consumption path until death. The studies by 

Hurd and Rohwedder and Scholz, Seshadri, and Khitatrakun assume that 

households value consumption later in retirement less than earlier, in part 

reflecting the declining probability of being alive later in life;. This 

assumption lowers consumption targets later in retirement than they 

would under an assumption that households smooth their consumption 

throughout retirement. Hurd and Rohwedder found that 23 percent of 

married couples and 51 percent of single persons fall short of these 

targets. However, they find that single households and those with less 

education are more likely to be unprepared for retirement by the study’s 

targets. 

 

59 In 2014, SSA published estimated replacement rates for retired worker beneficiaries 

who were newly entitled in 2013. At age 65, these measured 34.6 percent for those with 

indexed career-average earnings of 160 percent of the average wage index, 41.7 percent 

for those with indexed career-average earnings equal to the average wage index, 56.3 

percent for those with indexed career-average earnings of 45 percent of the average, and 

77.4 percent for those with indexed career-average earnings of 25 percent of the average. 

There has been recent debate regarding the methodology of published Social Security 

replacement rate estimates, with some commentators saying the published rates 

understate the replacement rate and others countering this critique. For discussion of 

different measures of Social Security replacement rates, see Andrew G. Biggs and Glenn 

R. Springstead, “Alternate Measures of Replacement Rates for Social Security Benefits 

and Retirement Income,” Social Security Bulletin, vol. 68, no. 2, 2008; and Stephen Goss, 

Michael Clingman, Alice Wade, and Karen Glenn, “Replacement Rates for Retirees: What 

Makes Sense for Planning and Evaluation?” SSA, Office of the Chief Actuary, Actuarial 

Note Number 155, July 2014.
Page 28 GAO-15-419 Retirement Savings

and other financial assets, has successfully provided for retirees. 

However, while they find that, based on 2010 data, most near-retiree 

households across income groups have some assets in an employmentsponsored plan or an IRA, they also find that the percentage of such 

households rises with income: about half of households with income less 

than $30,000 to about 95 percent of households with income of at least 

$80,000. ICI also cites a lower percentage of 65-and-older Americans 

living in poverty than the overall population as evidence of success with 

the retirement system. They conclude that “on average” households are 

able to maintain their standard of living in retirement.

The Biggs and Schieber study argues that reported replacement rates 

published in prior Social Security Trustees reports understated the extent 

to which Social Security benefits replace earnings because Social 

Security uses lifetime earnings (instead of final-year earnings) and 

indexes earnings to average wages instead of average prices. These 

assumptions, they argue, overstate income during working years, and 

thus, published estimates understate how much Social Security benefits 

replace as a percentage of working income. Biggs and Schieber, like 

Scholz, Seshadri, and Khitatrakun, also argue that some studies set toohigh replacement rate targets because they ignore the favorable 

economic impact of children leaving the household.

Assumptions about income targets and methodology help drive the 

conclusions of these different studies. Some considerations in evaluating 

all of these studies include:

How income and expenses may change during retirement. One limitation 

of replacement rate calculations is that they suggest a fixed amount of 

retirement income and expenses. In reality, retirement income may vary 

throughout retirement, depending in part on the degree to which a 

household’s income is annuitized. To the extent that retirees have to 

manage savings in lump-sum form, such as in an IRA or DC plan, they 

face risk from investment returns and outliving their resources, among 

other factors. Even annuitized income, if not adjusted for inflation, may 

lose purchasing power, especially over longer retirement periods. To the 

extent that Social Security makes up a significant portion of retirement 

income, as we find earlier in this report, the amount and purchasing 

power of income throughout retirement may be more predictable, as 

would annuitized income from a DB plan or any other annuitized wealth (if 

inflation adjusted). Similarly, expenses, especially health care, may be 

neither steady nor predictable in retirement. Finally, for women 
Page 29 GAO-15-419 Retirement Savings

approaching or in retirement, becoming divorced, widowed or 

unemployed can have detrimental effects on their income security.60

How the impact of children on target income may be complicated. To the 

extent that children become independent long before parents retire, 

households approaching retirement may already have adjusted to higher 

levels of consumption, possibly raising their standard of living and 

required replacement rates. In retirement, the extent to which grown 

children may remain partially dependent on retired parents also would 

lessen the extent to which the cost of raising children is a foregone 

expense in retirement.

How income from Social Security may change. The 2014 Social Security 

Trustees; Report projects the Old-Age and Survivors Insurance Trust 

Fund, which pays Social Security retirement benefits, to become insolvent 

in 2034, at which point revenues are projected to be enough to cover 75 

percent of scheduled benefits.61 Should benefits fall, either because of 

insolvency or because of reforms to extend the solvency of the trust fund, 

this could represent a major challenge to households who rely heavily on 

Social Security for retirement income. Similarly, if reforms raised payroll 

taxes on workers, this could affect their ability to save for retirement. 

Further, as the normal retirement age continues to rise for receiving full 

benefits (gradually from 65 for beneficiaries born in 1937 or earlier to 67 

for those born in 1960 or later), future Social Security replacement rates 

will fall unless workers delay claiming until they are older.

 

60 GAO, Retirement Security: Women Still Face Challenges, GAO-12-699 (Washington, 

D.C.: July 19, 2012).

61 Under the Trustees’ intermediate assumptions. The 2014 Annual Report of the Board of 

Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance 

Trust Funds (Washington, D.C.: July 28, 2014).
Page 30 GAO-15-419 Retirement Savings

Surveys indicate that workers age 55 and older generally plan to retire at 

an older age and work more in retirement than current retirees actually 

did.62

According to the 2015 Employee Benefit Research Institute’s (EBRI) 

Retirement Confidence Survey, among workers 55 and older, nearly half 

say they plan to retire at 66 or older, while 14 percent of current retirees 

report having done so (see fig. 5). Gallup polling indicates that plans to 

retire later may be associated with low confidence in retirement savings. 

In a 2013 Gallup survey, baby boomers who strongly disagree with the 

statement “you have enough money to do everything you want to do” plan 

to retire at 73, while those who strongly agree with the statement plan to 

retire at 66.

These plans may indicate that the current cohort of workers nearing 

retirement will in fact work longer than current retirees did. However, if 

these expectations for retiring later prove unrealistic or do not come to 

fruition, workers’ retirement security may be at risk, since workers may 

have fewer years to work and save for retirement than they are planning.

63

 

62 In this section, retirees refers to people who self-identify as retired, and the term is not 

dependent on age, unless stated otherwise in this report.

According to a 2013 Society of Actuaries survey, retirement 

expectations also vary by household income, with workers from lowerincome households more likely to plan to retire at older ages than workers 

from higher-income households. Furthermore, among pre-retirees age 45 

and older, 31 percent of those making less than $50,000 a year, 14 

percent of those making between $50,000 and $99,000 a year, and 7 

percent of those making $100,000 or more a year do not plan to retire. 

Among those who said they do not plan to retire, the dominant reason 

was the expectation of never having enough money to retire (55 percent).

63 Gallup defines baby boomers as people born between 1946 and 1964.

Surveys Show That 

Workers Age 55 and Older 

Approaching Retirement 

May Overestimate Their 

Ability to Earn Future 

Income
Page 31 GAO-15-419 Retirement Savings

Figure 5: When Older Workers Plan to Retire Versus When Retirees Actually Retired64

The EBRI study found that those who retired earlier than expected are 

more likely than other retirees to say they are not confident about having 

enough money for a comfortable retirement or paying for basic expenses, 

medical expenses, and long-term care expenses. Similarly, a 2008 study 

by Michael Hurd and Susan Rohwedder of RAND found that those who 

said that health was an important reason for retirement were 

disproportionally from the lowest wealth quartile, tended to retire earlier 

than planned, and reduced consumption more than others in retirement, 

indicating their standard of living may have dropped in retirement.65

Many people retire for reasons they did not anticipate or that are out of 

their control, further indicating that workers’ financial plans for retirement 

may not hold and that workers may need to plan for uncertainty.

According to the 2012 Health and Retirement Study (HRS), 43 percent of 

retirees report having felt forced into retirement, while the EBRI study 

reported that 50 percent of retirees left the work force earlier than 

planned.66

 

64 Numbers do not add up to 100 because the remainder of the respondents either did not 

to answer or said they did not know. 

Moreover, younger retirees are more likely to feel forced into 

retirement; according to the HRS, 51 percent of retirees age 55-64 felt 

forced into retirement, while 34 percent of retirees age 65-74 said the 

65 Michael D. Hurd and Susan Rohwedder, The Retirement Consumption Puzzle: Actual 

Spending Change in Panel Data. (Cambridge, MA: National Bureau of Economic 

Research, April 2008.) 

66 GAO’s analysis is based on data from the 2012 Health and Retirement Study. 

Confidence intervals are between 40.4 percent and 46 percent with 95 percent certainty.
Page 32 GAO-15-419 Retirement Savings

same.67

Other events outside a worker’s control, such as the 2007-9 recession, 

may have caused workers to change their retirement plans. The 

recession had disparate effects on people approaching retirement, 

causing some to retire earlier than expected, likely when they could not 

find employment, and others to retire later, likely because their retirement 

savings balances had dropped. According to a 2013 Federal Reserve 

study, 38 percent of people age 55-64 and 47 percent of people age 65-

74 who had not yet retired reported that they delayed retirement since the 

recession, and 21 percent of people age 55-64 and 13 percent of people 

65-74 who had retired reported retiring earlier than planned.

In the EBRI study, where respondents could report multiple 

reasons for retiring earlier than planned, some said they did so because 

they could afford to or wanted to do something else, but more cited 

reasons such as health problems or disability (60 percent), changes at 

their workplace (27 percent), and having to care for a spouse or another 

family member (22 percent).

68

The 2013 survey sponsored by the Society of Actuaries found that current 

workers age 45 and older expect similar sources of income in retirement 

as current retirees are receiving, with a few key exceptions. Specifically, 

in one exception, 59 percent of pre-retirees expect to receive income from 

a DB plan while 73 percent of retirees receive income from a DB plan; in 

another, 81 percent of pre-retirees expect income from an employmentsponsored retirement savings plan, while 53 percent of retirees receive 

this. Most notably, 57 percent of pre-retirees expect employment, 

including self-employment, to constitute a source of income in retirement, 

while 28 percent of retirees report having this.

The Federal Reserve survey also suggests that many workers may 

unrealistically expect to continue working as long as possible or transition 

to new work when they “retire”. Only 18 percent of workers approaching 

retirement who have done some planning for retirement expect to stop 

 

67 GAO’s analysis is based on data from the 2012 Health and Retirement Study. 

Confidence intervals for 55-64–year-olds are between 46.8 percent and 54.8 percent with 

95 percent certainty. Confidence intervals for 65-74-year-olds are between 29.5 percent 

and 38.1 percent with 95 percent certainty. 

68 GAO’s analysis is based on data from the Federal Reserve’s 2013 Survey of Household 

Economics and Decisionmaking. As with all survey data, there is an associated sampling 

error. 
Page 33 GAO-15-419 Retirement Savings

work completely at retirement, while 59 percent of workers plan to work 

as long as possible, or plan to shift jobs in retirement by finding a different 

job or working for themselves. This contrasts with the experiences of 

retirees, among whom 29 percent shifted jobs in retirement (see fig. 6).69

Figure 6: Comparison of Retirement Plans of Older Workers and How Retirees Left Their Jobs70

As compared to people age 55-64, many people over 65 report being 

able to manage financially. According to a Federal Reserve survey, 72 

percent of people age 65-74 and 84 percent of people 75 and older say 

they are managing okay or better financially, while only 59 percent of 

people age 55-64 report they are managing okay or better financially. 71

 

69 This includes those who retired from their previous career and then found a different 

full-time or part-time job or started working for themselves. 

70 Asked among workers who have done some planning for retirement. Retirees were able 

to report multiple responses for this question. 

71 Age groups refer to everyone in that age group, retired and working, unless stated 

otherwise. 

People Age 55-64 Are 

Less Confident about 

Their Financial Well-Being 

in Retirement Than Those 

over 65
Page 34 GAO-15-419 Retirement Savings

While most people 65 and over have confidence in their retirement 

security, levels of confidence among people approaching retirement age 

are lower. According to an older EBRI survey, conducted in 2014, 69 

percent of retirees say that their experience in retirement with respect to 

their finances has been about the same or better than they expected it to 

be. According to the 2013 Survey of Consumer Finances, two-thirds of 

households age 65-74 say their received or expected retirement income 

is at least enough to maintain living standards (66 percent). On the other 

hand, just over half (52 percent) of people age 55-64 say retirement 

income they expect or receive will be enough to maintain living 

standards.72

However, confidence in affording certain types of expenses in retirement 

varies, suggesting that expenses such as for long-term care may be a 

cause of concern for retiree financial security. According to the EBRI 

study, 82 percent of retirees are very or somewhat confident they will 

have enough money to take care of basic expenses in retirement, 78 

percent are very or somewhat confident they will have enough to take 

care of medical expenses during retirement, and 59 percent are very or 

somewhat confident they will have enough money to pay for long-term 

care should they need it during retirement.

Moreover, poverty rates are higher for people approaching retirement and 

people who are 75 and older. According to the Current Population 

Survey, about 8 percent of people age 65-74 and 11 percent of those age 

75-84 are in poverty, which is also the poverty rate for people age 55-64. 

Twelve percent of people 85 and older are in poverty.73

 

72 GAO analysis based on data from the 2013 Survey of Consumer Finances. The margin 

of error for 65-74 year olds is 3.2 percent with 95 percent certainty and for 55-64 year 

olds, 2.2 percent with 95 percent certainty. 

The 

Supplemental Poverty Measure, an alternate poverty measure, found that 

14 percent of people age 55-64 are in poverty according to this 

73 Considerable variation exists across demographic subgroups. A greater proportion of 

blacks, Hispanics, and women over the age of 65 are in poverty as compared to other 

groups. 
Page 35 GAO-15-419 Retirement Savings

definition.74 For people 65-74, this number decreases to 12 percent, and 

then increases for the oldest Americans: 17 percent for people between 

75-84, and 20 percent for people 85 and older. Lastly, according to the 

HRS, many retirees say that “not having enough income to get by” is a 

concern, with 41 percent of retirees saying that this “bothers or worries” 

them a lot.75

While 23 percent of retirees report working for pay since they retired, 

according to the 2015 EBRI study, the reasons people work in retirement 

vary, including that they enjoy working (83 percent) and want to stay 

active and involved (79 percent). Some other reasons include wanting 

money to buy extras (54 percent), needing money to make ends meet (52 

percent), a decrease in the value of their savings or investments (38 

percent), or keeping health insurance or other benefits (34 percent).76

 

74 The official poverty measure from the Current Population Survey is sometimes used to 

determine eligibility for government programs and funding distributions. The Supplemental 

Poverty Measure (SPM) is considered an experimental measure. The SPM serves as an 

additional indicator of economic well-being and provides a deeper understanding of 

economic conditions and policy effects. First published in 2011, it calculates poverty 

thresholds using recent expenditures by families, including food, shelter, clothing, and 

utilities, and is adjusted for differences in family size, geographic variation in living costs, 

and homeownership. Unlike the official poverty measure, the SPM considers a family’s 

resources after taxes and transfer programs. Medical out-of-pocket expenses are also 

considered in the SPM, by being subtracted from a family’s resources. This means that 

SPM values health insurance in how it reduces out-of-pocket medical costs, but it does 

not account for the benefits of health insurance, such as access to medical providers or 

reduced stress from having insurance. 

75 GAO’s analysis is based on data from the 2012 Health and Retirement Study. 

Confidence intervals are between 32.8 percent and 48.9 percent with 95 percent certainty. 

76 The reasons retirees report working for pay is from the 2014 EBRI Retirement 

Confidence Survey, where 27 percent of retirees reported working for pay. 
Page 36 GAO-15-419 Retirement Savings

We provided a draft of this report to the Department of Labor, the 

Department of the Treasury, and the Social Security Administration for 

review and comment. The Department of Labor provided technical 

comments, which we incorporated as appropriate. The Department of the 

Treasury and the Social Security Administration did not have comments.

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies of this report to the 

Secretary of Labor, the Secretary of the Treasury, and the Commissioner 

of Social Security, and other interested parties. In addition, the report will 

be available at no charge on the GAO website at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

me at (202) 512-7215 or jeszeckc@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made contributions to this 

report are listed in appendix III.

Sincerely yours,

Charles A. Jeszeck

Director, Education, Workforce, and Income Security

Agency Comments
Appendix I: Objectives, Scope, and 

Methodology

Page 37 GAO-15-419 Retirement Savings

To analyze retirement savings and income for workers approaching 

retirement and for those of retirement age, we answered the following 

questions:

1. What financial resources do workers approaching retirement and 

current retirees have?

2. What evidence do studies and surveys provide about retirement 

security for workers and retirees?

To describe the financial resources of near and current retirees, we 

examined financial information from the 2013 Survey of Consumer 

Finances (SCF). The SCF is a triennial survey of household assets and 

income from the Board of Governors of the Federal Reserve System 

(Federal Reserve). The 2013 SCF surveyed 6,026 U.S. households about 

their pensions, incomes, asset holdings and debts, and demographic 

information. The SCF is conducted using a dual-frame sample design. 

One part of the design is a standard, multistage area-probability design, 

while the second part is a special over-sample of relatively wealthy 

households. This is done in order to accurately capture financial 

information about the population at large as well as characteristics 

specific to the relatively wealthy. The two parts of the sample are adjusted 

for sample nonresponse and combined using weights to make estimates 

from the survey data representative of households overall. In addition, the 

SCF excludes people included in the Forbes magazine list of the 400 

wealthiest people in the United States. Furthermore, the 2013 SCF 

dropped 11 observations from the public data set that had net worth at 

least equal to the minimum level needed to qualify for the Forbes list.

We found the 2013 SCF to be reliable for the purposes of our report. 

While the SCF is a widely used federal data source, we conducted an 

assessment to ensure its reliability. Specifically, we reviewed related 

documentation and internal controls, spoke with agency officials, and 

conducted electronic testing. When we learned that particular estimates 

were not reliable for our purposes–such as estimates of future DB 

income–or had sample sizes too small to produce reliable estimates, we 

did not use them. 

Nonetheless, the SCF and other surveys that are based on self-reported 

data are subject to nonsampling error, including the inability to get 

information about all sample cases; difficulties of definition; differences in 

the interpretation of questions; respondents’ inability or unwillingness to 

provide correct information; and errors made in collecting, recording, 

Appendix I: Objectives, Scope, and 

Methodology

Retirement Financial 

Resources
Appendix I: Objectives, Scope, and 

Methodology

Page 38 GAO-15-419 Retirement Savings

coding, and processing data. These nonsampling errors can influence the 

accuracy of information presented in the report, although the magnitude 

of their effect is not known.

Estimates from the SCF are also subject to some sampling error since the 

2013 SCF sample is one of a large number of random samples that might 

have been drawn. Since each possible sample could have provided 

different estimates, we express our confidence in the precision of the 

sample results as 95 percent confidence intervals. These intervals would 

contain the actual population values for 95 percent of the samples that 

could have been drawn. In this report, we report percentage or other 

numerical estimates along with their 95 percent confidence intervals. 

Unless otherwise noted, all percentage estimates based on the SCF have 

95 percent confidence intervals that are within 3 percentage points, and 

all numerical estimates other than percentages have 95 percent 

confidence intervals that are within 5 percent of the estimate itself. All 

financial figures reported using SCF data are in 2013 dollars and most 

are rounded to the nearest thousand dollars.

Where possible, we relied on variable definitions used for Federal 

Reserve publications using the SCF.1 For example, we used the Federal 

Reserve’s variable for age, which is the age of the household head.2 We 

also used the Federal Reserve’s variable for retirement savings, which 

included assets accrued in defined contribution (DC) plans such as 401(k) 

plans as well as individual retirement accounts (IRA).3

 

1 See Jesse Bricker, et al. “Changes in U.S. Family Finances from 2010 to 2013: 

Evidence from the Survey of Consumer Finances,” Federal Reserve Bulletin, vol. 100, no. 

4 (September 2014).

We do not include 

the value of defined benefit (DB) plans, “traditional” pension plans that 

provide benefits based on a formula and typically pay lifetime benefits as 

an annuity unless a household has taken the benefit as a lump sum and 

converted it into an IRA or other account balance. Retirement savings 

also does not include savings held outside of a retirement account, which 

is included in financial assets as non-retirement savings. Similarly, we 

2 For purposes of data organization, the Federal Reserve considers the household head 

to be the male within a mixed-sex couple and the older individual within a single-sex 

couple. 

3 This includes IRAs that have been rolled over, for example, from retirement savings 

plans.
Appendix I: Objectives, Scope, and 

Methodology

Page 39 GAO-15-419 Retirement Savings

used other Federal Reserve variables to describe additional resources 

asked about in the SCF, such as home ownership, financial assets 

(including savings in and outside of a retirement account), debt, and net 

worth. This measure of net worth does not include the total value of 

anticipated DB plan or Social Security benefits, in part because it is 

difficult to determine the present value of these benefits.4

An important exception to our use of Federal Reserve variables is our 

estimation of household income: in order to separately estimate key 

components of retirement income, such as Social Security and DB plans,5

we developed our own variable for income while attempting to mirror the 

Federal Reserve’s income variable as closely as possible. We consulted 

with Federal Reserve staff to inform our calculations of Social Security 

and DB plan income. One limitation to these income calculations is that 

Social Security and DB plan income are for the respondent and his or her 

spouse/partner for 2013, whereas other income is reported for the entire 

family for 2012. However, we believe the estimates are reliable for our 

purposes. For example, 88 percent of households age 65 and older 

consist only of the respondent and his or her spouse/partner. Further, we 

conducted electronic testing and found no statistically significant 

difference between estimates of income using our variables and the 

Federal Reserve’s variables, either in aggregate or by various age 

groups. When describing the average share of household income from a 

particular source, we divided for each household the amount from that 

source by the household’s total income, and reported the average across 

all households.6

To provide context to retirement savings amounts, we calculated annuity 

equivalents using the Thrift Savings Plan retirement calculator. This 

provides information on the approximate amount of monthly lifetime 

income participants in the Thrift Savings Plan could receive if they used 

their retirement savings to purchase an inflation-protected annuity through 

 

4 While we do include DB plan and Social Security benefits in retirement income, we 

include DB plan benefits in retirement savings only if a household has taken the benefit as 

a lump sum and rolled it into an IRA or other account balance.

5 Income from DB plans includes traditional pensions with lifetime benefits and annuitized 

DC plans. In 2011, we found that few retirees with DC plans chose or purchased an 

annuity (GAO-11-400). 

6 We conducted this calculation for households with positive, non-zero income. 
Appendix I: Objectives, Scope, and 

Methodology

Page 40 GAO-15-419 Retirement Savings

the plan.7

Defining retirement for Americans is not without difficulty, as retirement is 

a nebulous concept and different people may define retirement for 

themselves differently. Self-defined retirees may work or not claim Social 

Security benefits, while people who do not identify as retired may claim 

Social Security benefits or not work. For the purpose of this report, we 

discuss households and workers nearing retirement age as 55-64 to 

isolate near retirees and determine retirement readiness, though some of 

this group may in fact be retired. We discuss the age group 65-74 to 

examine retirees in the first stage of retirement, although some members 

of this group may not be retired. Finally, we discuss the age group 75 and 

older, most of whom we expect to be retired.

The Thrift Savings Plan offers an annuity with monthly 

payments that increase each year up to 3 percent, based on inflation. 

Annuities purchased through other channels may provide different levels 

of lifetime income. If a household purchased an annuity without inflation 

protection, the initial amount of income would be higher. Similarly, 

different assumptions about the interest rate would change the annuity 

amount. For example, the calculator currently uses an interest rate of two 

percent as of the calculation date, though a higher interest rate would 

increase the annuity amount. 

To analyze other evidence of retirement security, we reviewed several 

studies of retirement adequacy and compared and contrasted their 

methodologies and findings. These included academic studies based on 

formal models of optimal saving behavior and consumption patterns, 

those that projected savings levels in retirement based on recent savings 

data, and other reports examining the levels, adequacy, and sources of 

retirement wealth. We selected savings projections models that we had 

familiarity with from past GAO reports, and chose other studies and 

reports based on recommendations from internal and outside 

stakeholders. We also interviewed authors of studies and other retirement 

experts about retirement readiness.

We also reviewed survey questions of retirees and workers approaching 

retirement age to infer information about their experiences of saving for 

 

7 While we reported rounded savings amounts, we based the annuity equivalent estimates 

off of non-rounded amounts. 

Studies and Surveys on 

Retirement Security
Appendix I: Objectives, Scope, and 

Methodology

Page 41 GAO-15-419 Retirement Savings

and living in retirement. These surveys asked questions regarding 

financial well-being, confidence in being able to afford a comfortable 

retirement, and expectations of when and how people plan to retire 

contrasted with the actual experiences of current retirees. We analyzed 

the most recent available data from all of the surveys used as of April 

2015. 

The University of Michigan’s Health and Retirement Study (HRS) is a 

longitudinal panel study that surveys a representative sample of 

approximately 26,000 Americans over the age of 50 every 2 years, with 

new cohorts being added to the sample every 6 years. The HRS also 

includes off-year studies to cover specific topics, like consumption, in 

depth. GAO used data from the 2012 core survey. As with all survey data, 

some statistical imprecision exists in the data that are presented in this 

report.

The Federal Reserve’s 2013 Survey of Household Economics and 

Decisionmaking is a first-time survey conducted by the Federal Reserve 

to better understand the financial state of U.S. households. The survey 

was conducted by the Board’s Division of Consumer and Community 

Affairs in September 2013 using a nationally representative online survey 

panel. The survey was administered by GfK, an online consumer 

research company. It created a nationally representative probabilitybased sample by selecting respondents, adults 18 years and older, based 

on both random digit dialing and address-based sampling. A total of 4,134 

surveys were fully completed. The data are weighted using the variables 

of gender, age, race/ethnicity, education, census region, residence in a 

metropolitan area, and access to the Internet. Demographic weighting 

targets are based on the Current Population Survey. As with all survey 

data, some statistical imprecision exists in the data that are presented in 

this report.

Gallup conducts daily tracking of public opinion through the Gallup U.S. 

Daily. For the Gallup U.S. Daily, Gallup samples 3,500 respondents a 

week, 15,000 a month, and 175,000 a year. Surveys are conducted 

among U.S. adults ages 18 and older, using both landline and cell phone 

numbers. Each sample of national adults includes a minimum quota of 50 

percent cell phone respondents and 50 percent landline respondents. The 

data are weighted by gender, age, race, Hispanic ethnicity, education, 

region, population density, and phone status. Demographic weighting 

targets are based on the Current Population Survey. Gallup samples 

landline and cell phone numbers using random-digit-dial methods. The 

results we reported on are based on the sub-sample of baby boomers, or 
Appendix I: Objectives, Scope, and 

Methodology

Page 42 GAO-15-419 Retirement Savings

1,929 adults born from 1946 through 1964. The margin of sampling error 

is plus or minus 4 percentage points at the 95 percent confidence level.

The 2015 Retirement Confidence Survey, conducted by the Employee 

Benefit Research Institute (EBRI) and Greenwald & Associates, is an 

annual survey on the views and attitudes of working-age and retired

Americans regarding retirement, their preparations for retirement, their 

confidence with regard to various aspects of retirement, and related 

issues. The survey was conducted in January and February 2015 through 

20-minute telephone interviews with 2,004 individuals (1,003 workers and 

1,001 retirees) age 25 and older in the United States. Random-digit 

dialing was used to obtain a representative sample, as well as a cell 

phone supplement. All data are weighted by age, sex, and education to 

reflect the actual proportions in the adult population. The weighted 

samples of workers and retirees yield a statistical precision of plus or 

minus 3.5 percentage points, with 95 percent certainty, of what the results 

would be if all Americans age 25 and older were surveyed with complete 

accuracy.

The 2013 Risks and Process of Retirement Survey, sponsored by the 

Society of Actuaries and prepared by Greenwald & Associates, is a 

survey intended to provide insights into how Americans decide to retire, 

how they perceive post-retirement risks, and how they manage financial 

resources in retirement. The survey was conducted online among 

Americans age 45-80 and included both pre-retirees and retirees at all 

income levels. A total of 2,000 interviews, half among pre-retirees and 

half among retirees, lasting an average of 20 minutes, were conducted 

using Research Now’s online consumer panel from August 19-28, 2013. 

The sample data are weighted by age, sex, and census region to the 

2012 population estimates released by the Census Bureau. As with all 

survey data, some statistical imprecision exists in the data that are 

presented in this report.

The official poverty rates and Supplemental Poverty Measures that we 

report come from the Census Bureau. The official poverty rate is 

sometimes used to determine eligibility for government programs and 

funding distributions. The Supplemental Poverty Measure is considered 

an experimental measure and serves as an additional indicator of 

economic well-being and provides a deeper understanding of economic 

conditions and policy effects. We reported on the poverty rates for older 

Americans, to indicate financial well-being.
Appendix I: Objectives, Scope, and 

Methodology

Page 43 GAO-15-419 Retirement Savings

For all survey data used in this report, we reviewed methodological 

documentation and, when appropriate, interviewed individuals 

knowledgeable about the data and conducted electronic testing. Based 

on this, we found the data to be reliable for the purposes used in this 

report.
Appendix II: List of Selected Studies of 

Retirement Income Adequacy

Page 44 GAO-15-419 Retirement Savings

Aon Hewitt, “The Real Deal: 2012 Retirement Income Adequacy at Large 

Companies – Highlights,” (2012), accessed April 8, 2015, 

http://www.aon.com/human-capital-consulting/thoughtleadership/retirement/survey_2012_the-real-deal.jsp. 

Biggs, Andrew G. and Sylvester Schieber, “Is There a Retirement Crisis?” 

National Affairs, no. 20 (Summer 2014): 55-75.

Brady, Peter, Kimberly Burham, and Sarah Holden. The Success of the 

U.S. Retirement System. Investment Company Institute. Washington, 

D.C.: December 2012.

Favreault, Melissa M., Richard W. Johnson, Karen E. Smith, and Sheila 

R. Zedlewski, “Boomers’ Retirement Income Prospects.” Urban Institute. 

Brief no. 34 (February 2012). 

Hurd, Michael D. and Susan Rohwedder, “Economic Preparation for 

Retirement.” Investigations in the Economics of Aging, ed. David A. Wise. 

Chicago: University of Chicago Press (May 2012), 77-113.

Munnell, Alicia H., Wengliang Hou, and Anthony Webb, “NRRI Update 

Shows Half Still Falling Short.” Center for Retirement Research at Boston 

College, Number 14-20. (December 2014). 

Rhee, Nari and Ilana Boivie, “The Continuing Retirement Savings Crisis.” 

National Institute on Retirement Security. Washington, D.C.: March 2015. 

Scholz, John Karl, Ananth Seshadri, and Surachai Khitatrakun, “Are 

Americans Saving ‘Optimally’ for Retirement?” Journal of Political 

Economy. vol. 114, no. 4. (2006): 607-643.

VanDerhei, Jack, “Retirement Income Adequacy for Boomers and Gen 

Xers: Evidence from the 2012 EBRI Retirement Security Projection 

Model.” Employee Benefit Research Institute, Notes, vol. 33, no. 5 (May 

2012).

Appendix II: List of Selected Studies of 

Retirement Income Adequacy
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 45 GAO-15-419 Retirement Savings

Charles A. Jeszeck, (202) 512-7215 or jeszeckc@gao.gov

Michael Collins (Assistant Director), Mark Glickman, Shilpa Grover, and 

Laura Hoffrey made key contributions to this report. In addition, support 

was provided by James Bennett, Mitchell Karpman, Kathy Leslie, Sheila 

McCoy, Susan E. Offutt (GAO Chief Economist), Mark Ramage, Joseph 

Silvestri, Frank Todisco (GAO Chief Actuary), Walter Vance, Charles 

Willson, and Craig Winslow.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments
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Page 46 GAO-15-419 Retirement Savings

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