Almost 37% of workers born in 1990 will have no defined contribution plan savings when they retire, according to a report issued today by the Government Accountability Office. In fact, participants overall will have only enough DC plan savings to replace on average 22.2% of their annualized career earnings.
The report also projects that workers born in 1990 in the lowest income quartile will accumulate an average of about $1,850 a year in retirement savings by the time they retire, a 10.3% replacement rate, while 63% of the low-income workers will have no DC plan savings when they retire. During a teleconference to discuss the report today, Reps. George Miller, D-Calif., and Robert Andrews, D-N.J., said the GAOs findings would spur a legislative response next year.
Its a disturbing picture, said Mr. Andrews. Its very clear that weve got to change the opportunities for savings, Mr. Miller said.
They said ideas under consideration include: a federal match for DC plan contributions made by lower-income workers; immediate participant enrollment in DC plans; easier vesting requirements for matching contributions; more portability; and more restrictions of pre-retirement withdrawals.
Mr. Miller also said he hopes to get a House vote in the first quarter of 2008 on his bill to enhance 401(k) plan fee-disclosure requirements.