The disparity between high-income older workers' retirement accounts compared with everyone else has grown in recent years, according to a new report from the Government Accountability Office.
Among those with a retirement account balance, the median balance was substantially larger in 2019 than in 2007 for high-income households. Of note, the GAO found that in 2019 the median for high-income households was about nine times that of middle-income households (about $605,000 and $64,300, respectively). While in 2007, the median for high-income households was about four times that of middle-income households (about $333,000 and $86,800, respectively).
Moreover, the percentage of low-income older households with a retirement account balance in 2019 was less than half of what it was in 2007 — about 10% in 2019 vs. 21% in 2007, according to the GAO's analysis of Survey of Consumer Finances data for households ages 51 to 64.
The low-income group has a median income of about $19,100 while the high-income group's median income is about $282,000, the GAO said in its report published July 27.
About 1 in 10 low-income households had a retirement account balance in 2019 compared with about 1 in 5 in 2007, while about 9 in 10 high-income households had a balance through the period, according to the GAO.
The share of older white households with a retirement account balance was significantly greater than the share of households of all other races from 2007 through 2019. Roughly 63% of white households had a retirement account balance in 2019 compared with about 41% of households of all other races, the report found.
Only about 23% of low-income workers have access to a workplace retirement account, but the GAO said automatic enrollment can increase participation of low-income older workers to about one-third.
The GAO said it conducted the study because members of Congress and others are concerned retirement plans' tax-preferred incentives accrue primarily to high-income workers and not low-income workers. Knowing the distribution of retirement account balances can help illuminate the retirement security of households of different incomes, the GAO said.
