The Finance Of Longevity

Empower Institute Explores View of a Retirement System in ‘Crisis’

Analysis of research and data shows today’s working Americans will likely have more money in retirement than previous generations

October 31, 2019 — GREENWOOD VILLAGE, Colo.–(BUSINESS WIRE)–American workers have greater access to workplace retirement plans than previous generations, they are saving more and are expected to have more money in retirement — all factors that run counter to the perception of a crisis in retirement savings, says a new report by the Empower Institute.

The Empower Institute, which is a research group within Empower Retirement, also lays out areas of focus for improving the retirement system. The report, “The Over-Stated Retirement Crisis,” which is based upon publicly available literature, challenges the view that the 40-year-old defined contribution system is overly deficient in providing adequate retirement security for American workers.

Americans Are ‘Saving Proportionately More’

“Workplace retirement plans have evolved and improved over the years, which makes saving for retirement easier and more accessible for more American workers,” says the paper’s analysis of the available research, noting that when workplace savings plans are considered in the context of the greater retirement system, Americans today are saving proportionately more than in the past.

In 1975 total retirement savings were equal to 48 percent of total employee wages, according to Federal Reserve Board data. In 2017, with the defined contribution system fully established, retirement assets topped 337% of employee wages.1

The Institute’s analysis of the research says it’s important to closely examine the entirety of the evolving and improving of the workplace retirement savings system, workers’ total assets, and savings rates as a whole, rather than as a single silo of data capturing any one factor.

The research shows that approximately $7.5 trillion is held in defined contribution plans, and access to workplace plans has increased over time. While 71 percent of civilian employees have access to either a defined benefit or a defined contribution plan, in 80 percent of married couples at least one spouse has access to a retirement plan. Total employee and employer contributions have increased from an average of 9.9 percent of employee salaries in 1984 to 12.8 percent of employee salaries in 2017.1

The Institute’s analysis of the research says that improvements to the retirement system are offering better levels of protection for retirement savers now than in the past. Portability and ownership, regulatory oversight, and the provision of advice are seen as key areas of focus.

Room for Improvement Remains

The Institute study indicates that while the reputational issues with the retirement system may be over-played, work remains to be done to improve the prospects for more Americans.

“[E]ach generation of savers is better off than the one that preceded it. While the current system is not broken, we can continue to work to improve it,” write the authors. Recommended paths forward include:

A retirement savings crisis in America? Not so fast...

  • Increasing plan access: The retirement system works best for those who have access to workplace retirement plans and can take advantage of the whole system beyond those plans, writes the Institute.
  • Improving plan features: Within individual plans, employers can choose options, such as automatic features, company-matching contributions, financial wellness plug-ins and advice solutions that can help their employees save more.


  • Public policy advocacy: Stakeholders in the retirement system can advocate for opportunities to increase coverage and portability. These efforts may include public policy interventions such as Social Security reform and open multi-employer plans, among other topics. Future legislation may further expand and protect Americans’ ability to build savings and generate income with the goal of achieving a comfortable retirement.

Read the paper at Empower Institute.




About Empower Institute
Formed in March 2015, the Empower Institute aims to critically examine investment theories, retirement strategies and assumptions. It suggests theories and changes for achieving better outcomes for employers, institutions, financial advisors and individual investors. The institute’s mission is bringing together industry insights and expertise to address the personal finance issues and retirement savings challenges Americans face today.
About Empower Retirement
Headquartered in metro Denver, Empower Retirement administers $653billion in assets for more than 9.2 million retirement plan participants, as of June 30, 2019. It is the nation’s second-largest retirement plan record keeper by total participants (Pensions & Investments, April 2019). Empower serves all segments of the employer-sponsored retirement plan market: government 457 plans; small, midsize and large corporate 401 (k) clients; non-profit 403 (b) entities; private-label recordkeeping clients; and Individual Retirement Account customers. In April, the company was named the “Best Company to Work for in Colorado” by career website Zippia. For more information please visit
1Andrew Biggs, American Enterprise Institute, Statement before House Committee on the Budget on “Keeping Our Promise to America’s Seniors: Retirement Security in the 21st Century,” “13 Things You (Probably) Didn’t Know About Retirement Savings,” May 2019. Calculated from data from National Income and Product Accounts.