A good chunk of Americans will outlive their savings if the retirement landscape doesn't change in the country, one expert predicted recently on Yahoo Finance.
That’s why Jason Grumet, founder of the Bipartisan Policy Center, has high hopes for pending legislation in Congress that expands access to workplace retirement accounts.
"We think there’s a real opportunity here, it’s really critical ... because we think about 40% of folks are going to literally run out of money in their retirement,” Grumet told On the Move. “And the current trajectory is likely to get worse, not better."
Grumet appeared as part of Yahoo Finance’s ongoing partnership with the Funding our Future campaign, a group of organizations advocating for increased retirement security for Americans. His comments echo the dismal outlook that Americans themselves have about their retirement prospects.
Half of U.S. adults worry about running out of money in retirement, according to the most recent Financial Capability Study from the FINRA Foundation, a nonprofit dedicated to financial education.
‘An issue that is really affecting tens of millions of Americans’
Only 58% of Americans have any retirement account — either through their employer or an individual one, the FINRA Foundation found. That figure has hardly budged in the last decade.
About 45 million working Americans don’t have access to a retirement plan through their employers, Grumet noted, and that 30 million of those Americans would sign up if offered one.
The legislation, called the SECURE Act, would make it simpler and cheaper for small businesses to offer workplace retirement plans to their employers. It increases access for part-time workers, provides tax incentives to small employers and makes it easier to create automatic enrollments.
The bill is currently on a procedural hold in the Senate, but Grumet expects it to pass once it moves forward.
While its passage is a step in the right direction, Grumet acknowledged that it doesn’t address the future funding issues with Social Security benefits, which currently make up about a third of older Americans’ income.
The growing imbalance between the number of working adults funding the social program and the number of seniors tapping it will create a funding shortage in 15 years, he said, slicing benefits by 20%.
The SECURE Act is “a first step” in securing Americans’ retirements, Grumet said.
“It’s not the answer to our nation’s retirement security,” he added, “but at least it gets the ball rolling towards an issue that is really affecting tens of millions of Americans.”
Janna is an editor for Yahoo Finance. Follow her on Twitter @JannaHerron.