Retirement savings golden age: Pensions, real estate, stock gains
What factors contribute to some boomers' robust retirement savings?
Some factors contributing to robust retirement savings for some baby boomers include now-rare pensions, increases in real estate values, and gains from the stock market1. These individuals have benefited from a lifetime of savings, smart financial decisions, and in some cases, lucrative investment opportunities.
How has the shift from pensions to 401(k)s affected low-income households?
The shift from pensions to 401(k)s has disproportionately affected low-income households, making it increasingly difficult for them to save for retirement. The decline of pensions, which provided consistent payouts, and the rise of 401(k)s, which rely on workers to contribute funds, have contributed to this issue. Lower-income households are now less likely to have a retirement account balance, and those with defined contribution plans like 401(k)s have seen a decline in their account balances.
Why are pensions becoming increasingly rare for retirees?
Pensions are becoming increasingly rare for retirees due to a shift in the way employers approach retirement savings. In recent decades, the US has shifted away from pensions, in which employers offer consistent payouts to former employees in their post-working years. Now, more American workers have defined contribution plans, like 401(k)s, which rely on workers to contribute funds to grow their coffers. The decline of pensions can also be attributed to the decline in unionized workers, the rise of 401(k)s, and companies opting for less costly and less risky retirement plans.