Andrew Biggs of the American Enterprise Institute challenges a popular narrative about Americans’ savings for retirement.
If there is any point that unites Americans in these divided times, it is that we are not saving enough for retirement. “When asked if the nation faces a retirement crisis,” the National Institute on Retirement Security reported in 2024, “79 percent of Americans agree there indeed is a retirement crisis, up from 67 percent in 2020” (Doonan and Kenneally 2024).Other organizations such as the Economic Policy Institute and the Retirement Equity Lab also publish study after study claiming up to 90 percent of Americans have undersaved for retirement. The media echo these claims: A Google News search finds over 7,900 media references for the phrase “retirement crisis” in 2023 alone. Members of Congress haveresponded with costly proposals to expand Social Security or buttress private retirement savings, such as the Setting Every Community Up for Retirement Enhancement Act. And so the cycle continues.
But what if all this was a mistake?
More specifically, what if the entire retirement-crisis narrative playing out in opinion polls, the government, and the media was a massive case of confirmation bias? Think tanks and industry organizations claim Americans are under-saving, the media report on these claims, Americans believe these claims, and elected officials respond to these claims.
But are these claims of a retirement crisis true? The reality, I argue, is that the emperor has no clothes. …
… [A]ccess to retirement plans at work has expanded, that contributions are rising and retirement plan assets are at historical highs, and that labor force participation is at record-high levels among older ages. I have noted that since 1990, there has been a 1.5-year aver-age delay in claiming Social Security, and monthly Social Security benefits for new retirees in 2022 were 39 percent higher (adjusted for inflation) compared with the benefits Americans retiring in 2000 received.
