Slightly more U.S. households are likely to have sufficient money for retirement compared with five years ago, according to modeling from the Employee Benefit Research Institute.
In 2019, EBRI's retirement readiness rating, which simulates the percentage of future retirement paths for which a household is projected not to run short of money in retirement, was 59.4% on average. In 2014, it was 57.7%, meaning that 4% fewer households will run short of money in retirement than was the case with the 2014 version of EBRI's model.
EBRI, a non-profit research group, published an updated version of its retirement security projection model Thursday, which also found that the retirement deficit for U.S. households with a head of household age 35-64 decreased 13.7% to $3.83 trillion in 2019, from $4.44 trillion (in current dollars) in 2014 .The largest improvement was experienced by younger workers, with those age 35-39 projected to have a 22% decrease in their average deficits, the data show.
The model highlighted the importance of defined contribution plan eligibility in reducing retirement saving shortfalls. The average retirement deficit for individuals age 35-39 with no future years of eligibility in a DC plan is $78,046 per individual, more than five times the average retirement deficit for those who have at least 20 years of future eligibility in a defined contribution plan (where the average retirement deficit is $14,638), noted Jack VanDerhei, EBRI research director, in a statement accompanying the data.
Moreover, a cut in Social Security benefits would hit young workers hard, according to the model: A 23% pro rata reduction in those benefits starting in 2034 would increase deficits by an average of 17% for those currently age 35-39.
An issue brief about the research is available on EBRI's website. Registration is required.