Even many of the diminishing share of workers who are enrolled in traditional pension programs face uncertainty as an increasing number of plans are underfunded, causing employers to freeze benefits.
The hits to retirement income come as many Americans are living longer and health-care costs continue to grow, meaning they need to salt away more money for retirement.
Workers have limited options for closing the gap. More are going to have to work longer. After many decades of decline, average retirement ages have already been creeping up in the past 20 years.
A recent survey by the Conference Board found that nearly two-thirds of Americans ages 45 to 60 say they plan to delay retirement. Two years earlier, 42 percent said they would work longer.
Some lawmakers and other advocates say the best way to cope with the growing gap would be to further expand Social Security and Medicare benefits, or to add another layer of taxpayer-subsidized savings that workers could use only for retirement.
“We need to do more to help American families cope with this looming retirement crisis,” Sen. Tom Harkin (D-Iowa), chairman of the Committee on Health, Education, Labor and Pensions, said at a hearing late last month. “Hardworking Americans deserve to be able to rest, take a vacation and spend more time with their grandkids when they get older.”
But many policymakers are pushing to rein in the nation’s debt by trimming Medicare, Medicaid and Social Security benefits. Those programs are the primary drivers of the long-term deficit but are also financial mainstays for the vast majority of the nation’s retirees.
Both Medicare and Social Security already are on course to provide reduced benefits for future retirees — reductions that will grow deeper if lawmakers follow through on new proposals to further trim the programs.
With the Social Security retirement age moving to 67 under a federal law passed in 1983, people who leave the workforce earlier — and the vast majority do — will see smaller payouts.
Health-care costs continue to outpace inflation, meaning more out-of-pocket expenses for future seniors. Retirees are also slated to pay more for their health care with Medicare premiums, which are deducted from the Social Security checks of senior citizens, set to rise from 12.2 percent to 14.9 percent by 2030.
James G. Marzano, 60, was on his way to a comfortable retirement when he lost his job at a telecommunications firm in 2002. “People talk about a lost decade; that’s what I’ve been through,” he said.
Marzano, a Tampa resident who is married to a retail worker and has a son who is a high school senior, spent most of the past decade in and out of contract jobs and other posts that paid far less than he was used to. He was forced to dip into his 401(k) account to make ends meet, and even now that he has found a good job, he says, his savings is maybe 60 percent of what it was 10 years ago.
“If everything had stayed status quo from 2002 until 2012, I might be doing what I wanted to do today,” he said. “But, as it stands, I am nowhere near ready to retire.”