Americans Aren't Saving for Retirement

February 23, 2018



















When American Express established the first private corporate pension plan in the United States in 18751, corporations in the following decade soon followed suit as the economy was booming and private sectors became competitive.  Businesses had to create an incentive to keep workers loyal to their business and not jump ship to competitors.  


Pension Plans then became the norm until the Great Depression hit millions of people. This prompted President Franklin D. Roosevelt to introduce the Social Security Act of 1935. This act provided a "general welfare by establishing a system of Federal old-age benefits" 2 which derived from American tax payers as a supplement for retirement.  


The Economic Policy Institute showcased a study based on the data from the Federal Reserve Board's Survey of Consumer Finance Accounts, which reflects troubling signs of anyone thinking they have time to save for retirement.  From 1989 to 2013, Defined-Benefit Plans, such as corporate pension plans, have seen a steady decline while Defined-Contribution Plans, e.g., 401(k)s, 403(b), and profit-sharing plans, have seen only a mild increase over this 24-year period.  Americans are simply not saving enough and with the mindset of Social Security being readily available to all U.S. citizens when set to retire. According to the Social Security Administration, in 2010, we saw a $48.9 billion deficit with the forecast of reaching negative$344B in the next 17 years.   

 The point is clear that one cannot rely on public assistance alone for retirement and it is highly imperative that everyone takes action to start saving and start saving as much as they can because unless one wants to work for the rest of his or her life, then drastic savings for retiring need to occur. 







1 Employee Benefit Research Institute,

2 Social Security Act,

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