Retirement Savings and Household Wealth: Trends from 2001 to 2004

^Pr^ep^ar^{ed f}^o^r^M^e^m^b^ers^an^d^Com^mⁱ^t^t^ees^of^C^ong^r^e^ss

Since about 1980, the proportion of workers who participate in employer-sponsored retirement
plans has remained stable at about half of the workforce. Over the past 25 years, however, there
has been a shift by employers from defined benefit (DB) pensions—which pay a retirement
benefit in the form of a lifelong annuity—to defined contribution (DC) plans, which are more like
savings accounts maintained by employers on behalf of each participating employee. One of the
key distinctions between a defined benefit plan and a defined contribution plan is that in a DB
plan, it is the employer who bears the investment risk. The employer must ensure that the pension
plan has sufficient assets to pay the benefits promised to workers and their surviving dependents.
In a DC plan, the worker bears the risk of investment losses. The worker’s account balance
depends on how much he or she contributes to the plan and how the plan’s underlying
investments perform.
Once every three years, the Federal Reserve Board collects data on household assets and
liabilities through the Survey of Consumer Finances (SCF). According to the most recent survey,
47.9% of workers under age 65 participated in employer-sponsored retirement plans—both DB
and DC—in 2004, down from 49.6% in 2001. The decline in retirement plan participation
between 2001 and 2004 was most heavily concentrated among workers under 45 years old, male
workers, non-white workers, unmarried workers, those who did not attend college, and those with
household incomes in the bottom half of the income distribution.
The Survey of Consumer Finances shows that 56.3 million households owned at least one
retirement account in 2004—whether an individual retirement account (IRA), a 401(k) plan, or
other employment-based savings plan—compared with 56.9 million households that owned at
least one such account in 2001. The proportion of households that owned a retirement account fell
from 53.4% in 2001 to 50.2% in 2004. The median balance in all such accounts (measured in
2004 dollars) rose from $30,462 in 2001 to $36,000 in 2004. The number of households that
owned a defined contribution plan from current or past employment rose from 38.3 million in
2001 to 38.8 million in 2004. The median balance in these accounts (in 2004 dollars) rose from
$19,172 in 2001 to $28,000 in 2004. The number of households that owned an IRA or Keogh plan
for the self-employed fell from 33.4 million in 2001 to 32.6 million in 2004. The median balance
in these accounts (in 2004 dollars) rose from $28,758 in 2001 to $30,000 in 2004.
The median value in 2004 of all retirement accounts owned by households headed persons
between the ages of 55 and 64 was $88,000, up from $58,580 in 2001. For a 65-year-old retiring
in May 2006, $88,000 would be sufficient to purchase a level, single-life annuity that would pay
$653 per month, based on the federal Thrift Savings Plan’s current annuity interest rate of
5.375%. This amount would replace just 15% of the median household income of $53,400 among
households headed by individuals who were 55 to 64 years old in 2004.

Trends in Retirement Plan Design.............................................................................................1
401(k) plans........................................................................................................................1
The Survey of Consumer Finances...........................................................................................2
Participation in Employer-Sponsored Retirement Plans...........................................................2
Recent Trends in Retirement Plan Participation.................................................................2
Congress and Retirement Saving..............................................................................................6
Retirement Savings of American Households...........................................................................7
Summary of Retirement Plan Ownership...........................................................................8
Retirement Account Balances by Age of Household Head................................................11
Retirement Plan Ownership and Demographic Traits.......................................................13
Household Net Worth........................................................................................................17
Conclusion .............................................................................................................................. 18
Refere nces ............................................................................................................................... 19
Table 1. Workers’ Participation in Retirement Plans in 2001..........................................................3
Table 2. Workers’ Participation in Retirement Plans in 2004..........................................................5
Table 3. Household Retirement Account Balances in 2001............................................................9
Table 4. Household Retirement Account Balances in 2004..........................................................10
Table 5. Household Retirement Account Balances, by Age of Householder................................12
Table 6. Household Ownership of Individual Retirement Accounts and Keogh Accounts
in 2004........................................................................................................................................14
Table 7. Household Ownership of Defined Contribution Plans from Current or Past Job in
2004 ............................................................................................................................................ 15
Table 8. Median Household Net Worth in 2001 and 2004, by Age of Household Head...............17
Author Contact Information..........................................................................................................19

Since about 1980, the proportion of workers who participate in employer-sponsored retirement
plans has remained stable at approximately half of the workforce. Over the past 25 years,
however, there has been a shift by employers from defined benefit plans to defined contribution
plans. Defined benefit (“DB”) plans usually are funded solely by employer contributions and
investment earnings on those contributions and they pay a retirement benefit in the form of a
lifelong annuity. The amount of the annuity usually is based on the employee’s length of service
and average salary. Defined contribution (“DC”) plans, in contrast, are more like savings accounts
maintained by employers on behalf of each participating employee. In the most common type of
DC plan—those established under Section 401(k) of the tax code—the employee defers a portion
of his or her salary, which is invested in stocks, bonds, or other assets. The employer often
matches some or all of the employee’s contribution to the plan. At retirement, the balance in the
account is the sum of past contributions plus interest, dividends, and capital gains—or losses. The
account balance is often distributed to the departing employee as a single lump sum. One of the
key distinctions between a defined benefit plan and a defined contribution plan is that in a DB
plan, the employer bears the investment risk. The employer must ensure that the plan has
sufficient assets to pay the benefits promised to workers and their surviving dependents. In a DC
plan, the worker bears the risk of investment losses. The worker’s account balance depends on
how much he or she contributes to the plan and how the plan’s underlying investments perform.
In 1978, Congress added section 401(k) to the Internal Revenue Code. Three years later, the
Internal Revenue Service (IRS) published regulations for “cash or deferred arrangements”
established under Section 401(k). Since that time, DC plans have overtaken traditional defined
benefit pensions in the number of plans, the number of participants, and total assets. Typically, in
a 401(k) plan, the employee must decide whether to participate, how much to contribute, and how
to invest the assets. In 1998 and 2000, the IRS issued rulings that permit employers to enroll
employees automatically in 401(k) plans. Revenue Ruling 98-30 allows employers to
automatically enroll new employees in 401(k) plans. Revenue Ruling 2000-8 allows automatic
enrollment in 401(k) plans of current employees who previously had not elected to participate. In
either case, employees who are enrolled automatically must be given the option to drop out of the
plan. In 2004, the IRS published a general information letter clarifying that the amount deducted
from the employee’s pay and contributed to the plan can be any amount up to the annual
contribution limit under IRC §402(g), and that the plan can automatically increase the employee’s
contribution over time, such as after each pay raise. Again, the IRS emphasized that employees
must be informed of these plan provisions and must have the option to change the amount of their
contribution or to stop contributing to the plan altogether.
Over the past 10 years, many large employers have converted their traditional DB pensions to
“hybrid” plans that have characteristics of both DB and DC plans. The most popular hybrid is
called a cash balance plan. In a cash balance plan, the benefit is defined in terms of an account
balance. The employer makes contributions to the plan and pays interest on the accumulated
balance. However, these account balances are merely bookkeeping devices that describe the
employee’s accrued benefit. They are not individual accounts owned by the participants, as is the
case with 401(k) plans. Because the employer is required to provide a benefit that is equal to at
least the sum of the employer’s contributions plus the accrued interest on those contributions, a
cash balance plan is legally considered to be a defined benefit plan.

This Congressional Research Service (CRS) report presents data on retirement plan participation
and retirement savings account ownership collected through the Survey of Consumer Finances
(SCF) in 2001 and 2004. The SCF is an interview survey sponsored by the Board of Governors of
the Federal Reserve System in cooperation with the Department of the Treasury. It is conducted
once every three years to collect information on the assets and liabilities of U.S. households, the
sources and amounts of their income, their demographic characteristics, employment, and
participation in employer-sponsored health and retirement plans. Data from the SCF are widely
used by economists at the Federal Reserve, other government agencies, and by private-sector
research organizations and academic institutions to study trends in the amount and distribution of
assets and liabilities among U.S. households. Since 1992, SCF data have been collected by the
National Organization for Research at the University of Chicago (NORC). In 2001, 4,449
households were interviewed for the SCF, representing a total of 106.5 million U.S. households. ¹
For the 2004 SCF, members of 4,522 households were interviewed. The 2004 interview sample
represented 112.1 million households.
Most of the information collected in the Survey of Consumer Finances—such as total assets and
liabilities—is reported at the household level. The only data reported separately for the
householder and his or her spouse or partner describe these individuals’ employment, pension
coverage, and demographic characteristics. In the tables that follow, Table 1 and Table 2 show
participation in retirement plans by individual workers, who were either the householder or the ²
spouse or partner of the householder. All of the other tables in the report, which describe
ownership of retirement accounts and the average balances in those accounts, represent
ownership of those accounts by households rather than by individual members of households.
Social Security, employer-sponsored retirement plans, and personal savings are sometimes called
the “three-legged stool” of retirement income, but for many workers at least one of the legs of the
stool is missing. Coverage of workers under Social Security is nearly universal, but only about
half of all workers in the United States are included in employer-sponsored retirement plans.
Data from the Survey of Consumer Finances indicate that the percentage of workers under age 65
who participated in employer-sponsored retirement plans fell from 49.6% in 2001 to 47.9% in ³

2004. (See Table 1 and Table 2.) Three-fourths of workers who participated in employer-

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sponsored retirement plans in 2004 were enrolled in defined contribution plans, such as 401(k)
plans. Just 18.4% of workers participated in defined benefit pension plans, and only 7% of
workers participated in both types of plan. The decline in retirement plan participation between

2001 and 2004 was most heavily concentrated among workers in particular demographic groups:

• Among workers under 35 years old, retirement plan participation fell from 40.5%
in 2001 to 35.6% in 2004. Participation among workers 35 to 44 years old fell
from 54.2% in 2001 to 50.0% in 2004.
• Among non-white workers, participation in employer-sponsored retirement plans
fell from 45.7% in 2001 to 39.1% in 2004.
• Among working men, participation in employer-sponsored retirement plans fell
from 53.4% in 2001 to 49.2% in 2005.
• Participation in retirement plans among workers who were widowed, divorced, or
never-married declined from 44.6% in 2001 to 40.6% in 2004.
• Participation among workers under age 65 who did not graduate from high
school fell from 24.1% to 18.0% between 2001 and 2004, while among those
who had only a high school diploma or a G.E.D. certificate, retirement plan
participation fell from 43.5% in 2001 to 39.8% in 2004.
• Among workers with household incomes in the lowest quarter of the income
distribution, participation in employer-sponsored retirement plans fell from
23.2% in 2001 to 18.7% in 2004, while among those with household incomes in
the next-lowest income quartile, retirement plan participation fell from 43.7% to

42.8%.

Table 1. Workers’ Participation in Retirement Plans in 2001
^Worker^{Number of}^a^{Any Type of}^b^Defined^b^Defined^b^Both^b
^Chara^cteristics^Workers^Plan^Contribution^Benefit^Types
^{Relationship to householder}
^{Householder 71,7}¹⁰^51.5%^40.5%^19.6%^8.9%
^Spouse/part^{ner 38,1}⁶¹^46.1^34.1^18.6^6.6
^Age
^{Under 3}⁵^33,2⁴¹^40.5^33.1^11.6^4.2
^{35 to 4}⁴^34,0⁴¹^54.2^43.9^19.7^9.6
^{45 to 5}⁴^28,3⁰¹^56.4^40.2^27.6^11.6
^{55 to 6}⁴^14,2⁸⁸^46.4^32.9^19.6^6.6
^Race
^{White, non-Hispanic}^84,8⁰⁸^50.8^39.4^20.1^8.9
^{Black, Hispanic, or}^25,0^{63 45.7}^34.5^16.6^5.4
^Asian
^Sex
^{Male 56,5}⁵⁵^53.4^42.1^20.9^9.8
^{Female 53,3}¹⁷^45.5^34.1^17.5^6.3

^Worker^{Number of}^{Any Type of}^Defined^Defined^Both
^Chara^cteristics^Workers^a^Plan^b^Contribution^b^Benefit^b^Types^b
^{Marital status}
^{Married 72,6}⁹⁷^52.2^39.9^21.4^9.3
^{Not married}^37,1⁷⁵^44.6^35.0^15.0^5.7
^Educ^ation
^{College graduate}^37,2⁰⁹^64.1^50.4^27.0^13.6
^{Some college}^28,1⁸³^46.6^36.2^17.1^6.9
^{High School graduate}^35,1³⁰^43.5^32.7^15.5^4.9
^{Less tha}^{n 1}²^yea^{rs of}^9,35^{0 24.1}^16.6^9.2^1.8
^school
^{Household inc}^{ome in 2000}^c
^{Top income quartile}^32,4⁷¹^63.4^50.4^27.0^14.3
^{Second income}^29,2^{91 59.5}^46.2^23.2^10.0
^quartile
^{Third income quartile}^25,9⁹²^43.7^31.8^15.8^4.1
^{Bottom income}^22,1^{17 23.2}^17.4^6.8^1.1
^quartile
^Full-tim^{e or part-time worke}^r
^{Part-time 16,2}⁹⁷^21.2^14.7^8.4^2.3
^{Full-time 93,5}⁷⁵^54.6^42.4^21.1^9.1
^{Establishment size}
^{Under 2}⁰^em^ployees^29,5⁹⁰^16.9^14.1^3.8^1.2
^{20 to 9}⁹^em^ployees^16,8⁸⁵^41.9^34.3^11.5^4.3
¹⁰⁰^{to 49}^{9 em}^ployees^18,7⁸⁰^60.0^45.8^21.5^7.6
⁵⁰⁰^{or more}^44,6^{16 69.8}^52.5^31.5^14.3
^employees
^{Union status}
^{Union 18,9}¹⁵^77.4^46.1^46.1^15.0
^{Non-union 90,9}⁵⁶^43.8^36.6^13.7^6.7
^Total^109,⁸⁷^{1 49.6%}^38.2%^19.3%^8.1%
^Source:^{CRS analysis of the Fed}^{eral Reserve Board’s 20}⁰¹^{Survey of Consumer Finances.}
^a.^{Employed house}^{holders and spo}^u^ses/part^ners^under^{age 6}^{5, in tho}^usands.
^b.^{Percentage of worke}^{rs who}^parti^{cipated in employer-sponsored}^r^{etirement plan}^{s, by ty}^{pe of}^plan.
^c.^{Among house}^{holds in which t}^he^{householder or spo}^{use was a}^{worker u}^{nder age}^{65, median in}^{come in 20}⁰⁰
^{(adjusted to 200}^{4 dollars) was $5}^3,64^{5. Households with income o}^f^{more tha}^{n $}^87,5^{84 w}^{ere in t}^he^top
^{income qua}^{rtile and house}^{holds with income u}^{nder $}^29,5^{60 we}^re^{in the}^{bottom qua}^{rtile. Because median}
^{income is higher in large}^{r hous}^eh^{olds than smaller house}^{holds, mo}^{re tha}^{n 5}^{0% of worke}^{rs live in}
^{households that a}^{re in t}^{he top tw}^{o quartiles of house}^{hold income.}

Table 2. Workers’ Participation in Retirement Plans in 2004
^Worker^{Number of}^a^{Any Type of}^b^Defined^b^Defined^b^Both^b
^Chara^cteristics^Workers^Plan^Contribution^Benefit^Types
^{Relationship to householder}
^{Householder 74,1}⁰³^48.5%^37.8%^18.5%^7.8%
^Spouse/part^{ner 37,9}³¹^46.8^34.5^18.0^5.9
^Age
^{Under 3}⁵^31,9⁷⁸^35.6^28.6^10.7^4.2
^{35 to 4}⁴^32,4⁴⁸^50.0^38.2^18.8^7.0
^{45 to 5}⁴^30,9⁷⁶^54.6^40.0^24.2^9.7
^{55 to 6}⁴^16,8¹⁰^55.4^43.1^21.4^9.4
^Race
^{White, non-Hispanic}^80,7⁹⁴^51.4^39.7^19.6^8.1
^{Black, Hispanic, or}^31,2^{39 39.1}^28.8^15.0^4.7
^Asian
^Sex
^{Male 57,3}⁷⁵^49.2^38.7^19.3^8.8
^{Female 54,6}⁵⁸^46.6^34.6^17.3^5.4
^{Marital status}
^{Married 72,9}⁸⁵^51.9^39.3^20.5^7.9
^{Not married}^39,0⁴⁹^40.6^31.9^14.4^5.6
^Educ^ation
^{College graduate}^38,9⁷⁵^63.3^49.1^23.9^9.8
^{Some college}^30,5¹³^46.4^35.1^19.1^7.7
^{High School graduate}^33,1⁸⁰^39.8^30.3^14.6^5.1
^{Less tha}^{n 1}²^yea^{rs of}^9,36^{5 18.0}^13.1^6.3^1.4
^school
^{Household inc}^{ome in 2003}^c
^{Top income quartile}^32,7¹²^64.1^53.0^23.1^12.0
^{Second income}^29,5^{97 57.4}^41.4^24.4^8.6
^quartile
^{Third income quartile}^26,7⁹⁶^42.8^31.1^16.5^4.8
^{Bottom income}^22,9^{29 18.7}^13.9^5.8^1.1
^quartile
^Full-tim^{e or part-time worke}^r
^{Part-time 19,8}⁷²^23.1^17.6^8.6^3.3
^{Full-time 92,4}³²^53.1^40.7^20.4^8.0
^{Establishment size}
^{Under 2}⁰^em^ployees^31,1⁴⁸^15.1^11.9^3.9^0.8

^Worker^{Number of}^{Any Type of}^Defined^Defined^Both
^Chara^cteristics^Workers^a^Plan^b^Contribution^b^Benefit^b^Types^b
^{20 to 9}⁹^em^ployees^17,9⁹³^43.0^34.3^11.6^2.9
¹⁰⁰^{to 49}^{9 em}^ployees^17,6¹⁵^56.2^41.4^22.1^7.3
⁵⁰⁰^{or more}^45,2^{79 69.3}^52.8^29.5^13.1
^employees
^{Union status}
^{Union 17,4}⁴⁴^78.1^45.4^48.5^15.8
^{Non-union 94,5}⁹⁰^42.4^35.1^12.8^5.5
^{Total 112,}⁰³⁴^47.9%^36.7%^18.4%^7.1%
^Source:^{CRS analysis of the Fed}^{eral Reserve Board’s 20}⁰⁴^{Survey of Consumer Finances.}
^a.^{Employed house}^{holders and spo}^u^ses/part^ners^under^{age 6}^{5, in tho}^usands.
^b.^{Percentage of worke}^{rs who}^parti^{cipated in employer-sponsored}^r^{etirement plan}^{s, by ty}^{pe of}^plan.
^c.^{Among house}^{holds in which t}^he^{householder or spo}^{use was a}^{worker u}^{nder age}^{65, median in}^{come in 20}⁰³
^{(adjusted to 200}^{4 dollars) was $5}^2,37^{2. Households with income o}^f^{more tha}^{n $}^90,3^{67 w}^{ere in t}^he^top
^{income qua}^{rtile and house}^{holds with income u}^{nder $}^29,7^{80 we}^re^{in the}^{bottom qua}^{rtile. Because median}
^{income is higher in large}^{r hous}^eh^{olds than smaller house}^{holds, mo}^{re tha}^{n 5}^{0% of worke}^{rs live in}
^{households that a}^{re in t}^{he top tw}^{o quartiles of house}^{hold income.}
Congress has acted several times over the years to encourage workers to save for retirement,
mainly by allowing income taxes to be deferred on amounts that workers or their employers
contribute to certain types of savings plans established to prepare for retirement. For example:
• The Technical Amendments Act of 1958 (P.L. 85-866) added Internal Revenue
Code Section 403(b), authorizing deferral of taxes on employer and employee
contributions to retirement plans of religious, charitable, educational, research,
and cultural institutions.
• The Self-Employed Individuals Tax Retirement Act of 1962 (P.L. 87-792)
authorized tax-deferred Keogh Plans (after Representative Eugene J. Keogh of
New York) for workers who are self-employed.
• The Employee Retirement Income Security Act of 1974 (P.L. 93-406) authorized
Individual Retirement Accounts (IRAs) in which eligible contributions and
investment earnings are tax-deferred.
• The Revenue Act of 1978 (P.L. 95-600) added Internal Revenue Code Section
401(k). Employers and employees can make pre-tax contributions to retirement
plans established under §401(k). Investment earnings accrue on a tax-deferred
basis until withdrawn.
• The Revenue Act of 1978 also added Section 457 to the Internal Revenue Code,
permitting state and local government employees to defer income taxes on a
portion of salary deposited into a retirement plan. Investment earnings are not
taxed until they are withdrawn.

• The Taxpayer Relief Act of 1997 (P.L. 105-34) authorized the Roth IRA, which
accepts only after-tax contributions but provides for tax-free distributions of
funds held for at least five years in the account.
• The Economic Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107-16)
increased the maximum contribution to IRAs and employer-sponsored §401(k),
§403(b), and §457 plans and allows people age 50 or older to make additional
contributions to IRAs and to retirement plans authorized under §401(k), §403(b),
and §457.
• Congress has authorized retirement savings plans that are designed specifically
for small employers. These include the Simplified Employee Pension (SEP)—a
type of IRA—authorized in 1978 and the Savings Incentive Match Plan for
Employers (SIMPLE), authorized in 1996.
With the trend away from defined benefit plans to defined contribution plans, workers now bear
much of the responsibility of preparing for retirement. Workers whose employers offer savings or
“thrift” plans such as those authorized under Sections 401(k), 403(b), and 457 of the Internal
Revenue Code can accumulate assets on a tax-deferred basis while they are working. In addition,
most people with earned income may contribute to an IRA. In both cases, taxes are paid when the ⁴
funds are withdrawn, and a penalty may apply if the withdrawal occurs before retirement. For
many people, the marginal income tax rate that they will face in retirement will be lower than the
rate that was applied to their earnings prior to retirement.
The following tables show the retirement savings of all households and those households in
which there was at least one worker under age 65. According to the SCF, of the 106.5 million
U.S. households in 2001, there were 75.7 million households in which the head or spouse was an
employed adult under age 65. In 2004, out of 112.1 total households, there were 79.6 million
households that included at least one worker under age 65. The tables show the number of
households that owned at least one retirement account as well as the average balances held in
those accounts. The tables do not include the portion of retirement wealth that is represented by
the present value of benefits accrued under Social Security and employer-sponsored defined-
benefit pension plans. They include only the balances accumulated in IRAs, Keogh plans for the
self-employed, and employer-sponsored defined contribution plans, including—but not limited
to—those authorized under §401(k), §403(b), and §457 of the tax code.

⁴^{In a}^tra^d^itio^na^{l IRA}^,^pre^-^ta^x^c^ont^ributi^ons^c^aⁿ^be^m^a^de^onl^y^if^the^w^o^rk^e^r^is^{not c}^o^v^e^re^{d by}^aⁿ^em^ploy^e^r-s^pons^ore^d
^r^e^tir^em^eⁿ^{t pla}ⁿ^or^ha^sⁱⁿ^c^o^m^e^be^low^am^ounts^s^p^e^cⁱ^fⁱ^e^d^{in la}^w^.^A^{ll inv}^e^s^t^m^e^{nt e}^a^r^ning^s^accru^e^oⁿ^{a t}^a^x-d^e^f^e^rred^b^a^si^s.
^Ro^t^h^IRA^s^accep^t^only^af^t^e^r-t^{ax c}^oⁿ^t^ri^b^u^tⁱ^oⁿ^s^;^ho^w^e^ver,^wⁱ^t^h^d^r^aw^a^l^{s f}^r^o^m^{a Ro}^t^h^IRA^d^u^rⁱⁿ^{g ret}ⁱ^r^emen^t^are^tax^-^fre^e^.

Mean and Median Values of Retirement Accounts
^{The average value}^{s of retireme}^nt^{accounts a}^{re s}^{hown in t}^{his repo}^{rt in terms}^{of both t}^{he “mea}^{n” a}^{nd the “median”}
^{values. The “mean” is a}^{simple arithmetic average.}^a^{It is calculated}^{by adding u}^p^the^{reported valu}^es^{of all accounts and}
^{then dividing this total by the}ⁿ^u^{mber of ac}^{count-holders. As a m}^{easure of ce}^{ntral te}^ndency—w^ha^{t an “average”}
^represe^nts—t^{he mea}^{n is flawed b}^{ecause it can}^{be in}^fluenced^{by a}^r^{elatively small number of}^un^{usually high or low}
^{values. The median is anothe}^{r kin}^{d of average that is more}^rep^rese^{ntative of the}^{population beca}^use^{it is not biased by}
^unu^{sually high or low values. The}^{median is calculated by ordering}^{all of the observed values}^{from hi}^{ghest to lowest}
^{and finding the}^{value that}^{lies exa}^{ctly at the midpoint of the}^{distribution. One-half of all observed va}^{lues are greate}^r
^{than t}^{he median a}^{nd the oth}^{er ha}^{lf are less tha}^{n the}^median.
^a.^A^{survey weight}^{has bee}^{n assigned}^{to each hou}^{sehold. The weights}^{sum to the}ⁿ^umbe^{r of hous}^{eholds in the}
^{United States. The means in t}^{he t}^{ables are th}^e^weighted^{means for each}^obser^vation.
The data from the SCF show that both the number and percentage of households that owned a
retirement account of any kind—whether an individual retirement account (IRA), a 401(k) plan,
or other employment-based plan—fell from 2001 to 2004. (See the top panels of Table 3 and
Table 4.) The number of households that owned at least one retirement account fell from 56.9
million in 2001 to 56.3 million households in 2004. The proportion of households that owned a
retirement account fell from 53.4% in 2001 to 50.2% in 2004. The number of households that
owned a defined contribution plan from current or past employment—i.e., that owned a
retirement plan other than a traditional IRA, a Roth IRA, or a Keogh account—rose from 38.3
million to 38.8 million, but this increase was not enough to prevent the percentage of households
that owned an employment-based retirement account from falling from 36.0% in 2001 to 34.6%
in 2004. Both the number and percentage of house holds that owned an IRA or Keogh plan also
fell between 2001 and 2004. In 2004, 32.6 million households (29.0%) owned an IRA or Keogh
plan, compared to 33.4 million (31.4%) in 2001. In both 2001 and 2004, only about 15 million
U.S. households owned both an IRA or Keogh plan and a defined contribution plan from current
or past employment. This number comprised 13.9% of all households in 2001 and 13.4% in 2004.
Although the percentage of U.S. households that owned a retirement account fell between 2001
and 2004, the mean and median account balances among those who owned such accounts rose
during this period. Measured in constant 2004 dollars, among households who owned a
retirement account of any kind, the median combined balance of their accounts rose from $30,462
in 2001 to $36,000 in 2004, an increase of 18.2%. The mean combined account balance increased
from $110,210 to $129,310, a rise of 17.3%. Among households that owned at least one defined
contribution plan from current or past employment, the median combined balance of all their
defined contribution accounts rose from $19,172 in 2001 to $28,000 in 2004, an increase of
46.0%. The mean value of the accounts rose from $73,313 to $99,993. Among households that
owned at least one IRA or Keogh plan, the median combined balance of all their IRA and Keogh
accounts rose from $28,758 in 2001 to $30,000 in 2004, an increase of just 4.3%. The mean value
of these accounts remained virtually unchanged at about $104,000.
According to the SCF, there were 75.7 million households with an employed head or spouse
under age 65 in 2001, and 79.6 million such households in 2004. (See the bottom panels of Table
3 and Table 4.) Both the number and percentage of these households that owned at least one
retirement account fell between 2001 and 2004. An estimated 46.3 million households with a
worker under 65 owned one or more retirement accounts in 2004, 1.2 million fewer households
than owned at least one retirement account in 2001. The number of worker-households that
owned a defined contribution plan from current or past employment remained unchanged at about

36.2 million, while the number of worker-households that owned an IRA or Keogh plan fell from
25.0 million in 2001 to 23.8 million in 2004. While the number and percentage of households
with a worker under age 65 that owned a retirement account fell between 2001 and 2004, the
average account balances of those who owned these accounts increased. Among worker-
households that owned a retirement savings account of any kind, the median value (in 2004
dollars) of all such accounts rose from $28,760 in 2001 to $35,000 in 2001. The mean value of all
the households’ accounts rose from $101,422 in 2001 to $122,349 in 2004.
Table 3. Household Retirement Account Balances in 2001
^{(amounts in 2004 dollars)}
^{Number of}^Percent^Mean^Median
^Households^of^{Value of}^{Value of}
^(thousands⁾^Households^Acc^ounts^Acc^ounts
^{All households}^106,⁴⁹⁶^100%
^{Owned either a}ⁿ^{IRA/Keogh or a}^56,8^{83 53.4}
^{defined contribution}^plan
^{All retirement accounts, all types}^$11^0,21⁰^$30,4⁶²
^{Owned a defined cont}^ribution^a^38,2^{95 36.0}
^plan
^{All defined contribut}^{ion accounts}^73,3^{13 19,1}⁷²
^{All retirement accounts, all types}^107,⁶¹¹^30,8⁸⁸
^{Owned an}^{IRA or Keogh plan}^b^33,4^{00 31.4}
^{All IRA/Keogh accounts}^103,⁶³^{7 28,7}⁵⁸
^{All retirement accounts, all types}^157,⁶⁴³^53,2⁵⁵
^{Owned both}^{an IRA/Keogh}^plan^14,8^{12 13.9}
^{and a defined contrib}^{ution plan}
^{All IRA/Keogh accounts}^88,6⁷⁰^27,6⁹³
^{All defined contribut}^{ion accounts}^121,⁷⁷⁷^35,1⁴⁸
^{All retirement accounts, all types}^210,⁴⁴⁶^90,9⁶⁰
^{Owned neith}^{er an}^{IRA/Keogh no}^r^49,6^{13 46.6}
^{a defined contribution}^plan
^{Number of}^Percent^Mean^Median
^Households^of^{Value of}^{Value of}
^(thousands⁾^Households^Acc^ounts^Acc^ounts
^{Households with a}^worker^75,6^{93 100%}
^{under 65}
^{Owned either a}ⁿ^{IRA/Keogh or a}^47,4^{87 62.7}
^{defined contribution}^plan
^{All retirement accounts, all types}^$10^1,42²^$28,7⁶⁰
^{Owned a defined cont}^ribution^36,2^{17 47.8}
^plan^a
^{All defined contribut}^{ion accounts}^72,3^{22 20,2}³⁷
^{All retirement accounts, all types}^104,²⁰⁵^30,8⁸⁸
^{Owned an}^{IRA or Keogh plan}^b^25,0^{26 33.1}

^{Number of}^Percent^Mean^Median
^Households^of^{Value of}^{Value of}
^(thousands⁾^Households^Acc^ounts^Acc^ounts
^{All IRA/Keogh accounts}^87,7^{84 22,3}⁶⁷
^{All retirement accounts, all types}^153,⁰⁰⁵^51,1²⁵
^{Owned both}^{an IRA/Keogh}^plan^13,7^{57 18.2}
^{and a defined contrib}^{ution plan}
^{All IRA/Keogh accounts}^83,9³⁷^25,5⁶²
^{All defined contribut}^{ion accounts}^118,⁶⁵¹^36,2¹³
^{All retirement accounts, all types}^202,⁵⁸⁸^87,3³⁸
^{Owned neith}^{er an}^{IRA/Keogh no}^r^28,2^{06 37.3}
^{a defined contribution}^plan
^Source:^{CRS analysis of the Fed}^{eral Reserve Board’s 20}⁰¹^{Survey of Consumer Finances}^.
^a.^{May also have owned a}ⁿ^{IRA or}^{Keogh plan.}
^b.^{May also have owned a defi}^{ned c}^{ontribution plan.}
Table 4. Household Retirement Account Balances in 2004
^{Number of}^Percent^Mean^Median
^Households^of^{Value of}^{Value of}
^(thousands⁾^Households^Acc^ounts^Acc^ounts
^{All households}^112,¹⁰⁹^100%
^{Owned either a}ⁿ^{IRA/Keogh or a}^56,3^{31 50.2}
^{defined contribution}^plan
^{All retirement accounts, all types}^$12^9,31⁰^$36,0⁰⁰
^{Owned a defined cont}^ribution^a^38,7^{70 34.6}
^plan
^{All defined contribut}^{ion accounts}^99,9^{33 28,0}⁰⁰
^{All retirement accounts, all types}^135,⁴⁸⁸^40,0⁰⁰
^{Owned an}^{IRA or Keogh plan}^b^32,5^{65 29.0}
^{All IRA/Ke}^{ogh accounts}^103,⁸⁹^{3 30,0}⁰⁰
^{All retirement accounts, all types}^174,²³⁸^61,0⁰⁰
^{Owned both}^{an IRA/Keogh}^plan^15,0^{05 13.4}
^{and a defined contrib}^{ution plan}
^{All IRA/Keogh accounts}^91,8⁷⁰^30,0⁰⁰
^{All defined contribut}^{ion accounts}^150,⁹¹²^50,0⁰⁰
^{All retirement accounts, all types}^242,⁷⁸²^107,⁰⁰⁰
^{Owned neith}^{er an}^{IRA/Keogh no}^r^55,7^{78 49.8}
^{a defined contribution}^plan
^{Number of}^Percent^Mean^Median
^Households^of^{Value of}^{Value of}
^(thousands⁾^Households^Acc^ounts^Acc^ounts
^{Households with a}^worker^79,6^{22 100%}

^{under 65}

^{Number of}^Percent^Mean^Median
^Households^of^{Value of}^{Value of}
^(thousands⁾^Households^Acc^ounts^Acc^ounts
^{Owned either a}ⁿ^{IRA/Keogh or a}^46,2^{87 58.1}
^{defined contribution}^plan
^{All retirement accounts, all types}^$12^2,34⁹^$35,0⁰⁰
^{Owned a defined cont}^ribution^a^36,2^{80 45.6}
^plan
^All^{defined contribut}^{ion accounts}^98,3^{95 28,0}⁰⁰
^{All retirement accounts, all types}^132,²⁸²^40,0⁰⁰
^{Owned an}^{IRA or Keogh plan}^b^23,8^{42 29.9}
^{All IRA/Keogh accounts}^86,7^{06 27,0}⁰⁰
^{All retirement accounts, all types}^174,³⁵⁰^65,0⁰⁰
^{Owned both}^{an IRA/Keogh}^plan^13,8^{34 17.4}
^{and a defined contrib}^{ution plan}
^{All IRA/Keogh accounts}^88,8⁶⁸^30,0⁰⁰
^{All defined contribut}^{ion accounts}^149,¹⁴⁹^50,0⁰⁰
^{All retirement accounts, all types}^238,⁰¹⁷^107,⁷⁰⁰
^{Owned neith}^{er an}^{IRA/Keogh no}^r^33,3^{35 41.9}
^{a defined contribution}^plan
^Source:^{CRS analysis of the Fed}^{eral Reserve Board’s 20}⁰⁴^{Survey of Consumer Finances}^.
^a.^{May also have owned a}ⁿ^{IRA or}^{Keogh plan.}
^b.^{May also have owned a defi}^{ned c}^{ontribution plan.}
An individual’s age is an important consideration when evaluating the adequacy of his or her
retirement savings. The more time that a person has until reaching retirement, the greater the
opportunity to make additional contributions and for investment earnings to build up his or her
retirement account balance. Table 5 shows rates of retirement account ownership and average
retirement account balances, categorized by the age of the household head.
Between 2001 and 2004, the percentage of households that owned a retirement account of any
kind fell among households in which the householder was under 55 years old. Among households
in which the householder was under 35 years old, the proportion that owned a retirement account
fell from 46.0% in 2001 to 40.8% in 2004. Among households in which the householder was 35
to 44 years old, the proportion that owned a retirement account fell from 62.7% in 2001 to 56.7%
in 2004. Among households in which the householder was 45 to 54 years old, the proportion that
owned a retirement account fell from 64.2% in 2001 to 58.5% in 2004. The only households in
which the rate of ownership of retirement plans increased between 2001 and 2004 were those in
which the householder was 55 to 64 years old. Among this group, the proportion who owned at
least one retirement account increased from 60.2% in 2001 to 63.5% in 2004. Among households
headed by an individual age 65 or older, the proportion that owned a retirement account of any
kind fell slightly from 2001 to 2004, declining from 36.9% to 36.3%.

The changes in average retirement account balances between 2001 and 2004 differed
substantially according to the age of the household head. The median combined balance (in 2004
dollars) of all retirement accounts owned by households in which the householder was under age
35 rose from $7,456 in 2001 to $11,000 in 2004. Among households headed by individuals
between 35 and 44 years old, the median retirement account balance actually fell between 2001
and 2004, declining from $30,888 to $30,000. Among households headed by persons between the
ages of 45 and 54, the median combined balance of all retirement accounts grew from $51,125 in
2001 to $60,00 in 2004. The greatest increase in median retirement account balances between
2001 and 2004—both in constant dollars and in percentage terms—occurred among households
in which the household head was 55 to 64 years old. Among these households, the median
balance of all retirement accounts rose from 58,580 in 2001 to $88,000 in 2004, an increase of

50%.

The increase in retirement account balances in the age group that is nearest to retirement age is
encouraging, but the median account balance of $88,000 is still not very large. For an individual
retiring at age 65 in May 2006, $88,000 could purchase a level, single-life annuity that would pay
$653 per month ($7,836 per year), based on the federal Thrift Savings Plan’s current annuity
interest rate of 5.375%. This amount would replace just 15% of the median household income of
$53,400 among households headed by individuals who were 55 to 64 years old in 2004.
Moreover, these median values reflect only the balances of households that owned a retirement
account. When we take into account households that had no retirement account—and thus had
retirement account balances of zero—a total of 11.7 million households headed by individuals 55
to 64 years old had retirement savings of $88,000 or less in 2004. This represents 68.3% of all
households headed by persons who were 55 to 64 years old in 2004.
Table 5. Household Retirement Account Balances, by Age of Householder
^{(amounts in 2004 dollars)}
^Households^Percent^Mean^Median
^{Number of}^a^with^b^with^{Value, all}^c^{Value, all}^c
²⁰⁰¹^Households^Acc^ounts^Acc^ounts^Acc^ounts^Acc^ounts
^{Age o}^f^ho^useholder
^{Under 3}⁵^24,2^{11 11,1}⁴⁷^46.0%^$20,1⁴⁴^$^7,4⁵⁶
^{years old}
^{35 to 4}⁴^23,7⁵¹^14,8⁹³^62.7^69,5²⁷^30,8⁸⁸
^{45 to 5}⁴^21,9⁴¹^14,0⁸⁹^64.2^139,¹²³^51,1²⁵
^{55 to 6}⁴^14,1⁰⁷^8,49⁰^60.2^207,⁷⁵²^58,5⁸⁰
^{65 or older}^22,4⁸⁶^8,26⁴^36.8^155,⁵¹¹^53,2⁵⁵
^All^households^106,⁴⁹⁶^56,8⁸³^53.4^110,²¹⁰^30,4⁶²
^Households^Percent^Mean^Median
^{Number of}^with^with^{value, all}^{value, all}
²⁰⁰⁴^households^a^acc^ounts^b^acc^ounts^acc^ounts^c^acc^ounts^c
^{Age o}^f^ho^useholder
^{Under 3}⁵^24,8^{74 10,1}⁴³^40.8%^$27,0⁹⁸^$11,0⁰⁰
^{years old}
^{35 to 4}⁴^23,1¹⁵^13,0⁹⁸^56.7^72,3³⁴^30,0⁰⁰
^{45 to 5}⁴^23,2⁷⁹^13,6²⁸^58.5^150,⁴⁴⁸^60,0⁰⁰

^Households^Percent^Mean^Median
^{Number of}^a^with^b^with^{Value, all}^c^{Value, all}^c
²⁰⁰¹^Households^Acc^ounts^Acc^ounts^Acc^ounts^Acc^ounts
^{55 to 6}⁴^17,0⁸⁶^10,8⁴⁵^63.5^231,⁹⁹⁷^88,0⁰⁰
^{65 or older}^23,7⁵⁵^8,61⁷^36.3^173,⁵⁵²^55,0⁰⁰
^All^households^112,¹⁰³^56,3³¹^50.2^129,³¹⁰^36,0⁰⁰
^Source:^{CRS analysis of the Fed}^{eral Reserve Board’s}^{Survey of Co}^{nsumer Finances}^.
^Note:^{Includes defined contribut}^{ion plan account}^balance^{s from}^b^{oth cur}^{rent a}^{nd past}^employmen^t.
^a.^{All households, in thousands.}
^b.^{All retirement account}^{s of all typ}^{es, whether}^{IRAs, Keogh account}^{s, or employment ba}^{sed plans.}
^c.^{Means a}^{nd medians re}^{flect combi}^{ned balances}^{in all types of retire}^{ment plan}^s.
The data presented in Table 6 show rates of ownership and average account balances for IRAs
and Keogh plans in 2004 as reported on the SCF. Table 7 shows similar statistics for employer-
sponsored defined contribution plans. The rates of ownership and average account balances are
shown in these tables in relation to the demographic characteristics of the household head. In
summary, in 2004:
• IRA ownership and average account balances rose steadily with household
income through age 65, after which they declined;
• Households whose head was white were nearly three times likely as those in
which the head was non-white to own an IRA, and their median account balance
was 2.5 times greater;
• Married couples were much more likely than unmarried individuals to have
owned an IRA, in part because these data measure retirement plan ownership at
the household level, and many married couples include two workers;
• IRA ownership rose with education, and college graduates were more than twice
as likely than those who had not graduated from college to have owned an IRA in

2004;

• More than half of households in the top 25% of the income distribution owned an
IRA in 2004, compared to one-third of households in the second-highest quartile,
one-fifth of households in the third quartile and just 8% of households in the
bottom 25%;
• homeowners were almost four times as likely as renters to have owned an IRA;
• IRA ownership differed little between full-time workers and part-time workers;
• IRA ownership among employees of businesses with fewer than 20 employees
differed little from that of workers at large businesses;
• Union membership appears to have little relationship to IRA ownership.
Many of the relationships between demographic characteristics and 401(k) participation were
similar to the relationships between demographic characteristics and IRA ownership, but there

were some differences. For example, while IRA ownership increased with each age up to 65,
401(k) ownership dropped in the 55-to-64 age category. This could be attributable in part to the
large number of people who roll over 401(k) account balances into an IRA when they retire, and
also to the fact that older workers are more likely to be employed at firms that still offer defined
benefit pension plans. While 401(k) ownership was greater among households headed by a white
individual than a non-white individual, the difference was not as great as the difference in the rate
of IRA ownership by race. Likewise, while 401(k) ownership was greater among couples than
singles, the difference was not as great as the difference in the rate of IRA ownership by marital
status. Full-time workers were 2.5 times as likely as part-time workers to have owned a defined
contribution retirement plan in 2004. Finally, while IRA ownership differed little among
employees of small firms and large firms, 401(k) ownership was substantially higher among
workers at businesses with more than 500 employees than among workers at businesses with
fewer than 20 employees. In 2004, 58% of workers at the largest firms owned a defined
contribution plan, compared to 24% of workers at small firms.
Table 6. Household Ownership of Individual Retirement Accounts and Keogh
Accounts in 2004
^{Percent that}^{Mean balance}^Median
^{Own a}ⁿ^IR^A^{in all}^{Balance in all}
^{Household head}^{Number of}^a^{or Keog}^h^b^IRA/Keogh^IRA/Keogh
^Chara^cteristics^Households^Plan^Plans^Plans
^Age
^{Under 3}⁵^24,8⁷⁴^16.0%^$17,6⁴¹^$8,00⁰
^{35 to 4}⁴^23,1¹⁵^25.2^52,5⁰⁶^20,0⁰⁰
^{45 to 5}⁴^23,2⁷⁹^33.6^91,0⁵⁰^35,0⁰⁰
^{55 to 6}⁴^17,0⁸⁶^43.9^142,⁵⁴⁴^60,0⁰⁰
^{65 or older}^23,7⁵⁵^31.4^164,⁷⁰³^48,0⁰⁰
^Race
^{White, non-Hispanic}^80,5¹¹^35.7^110,⁹⁷¹^32,5⁰⁰
^{Black, Hispanic, or Asian}^31,5⁹⁸^12.2^51,2⁵⁰^13,0⁰⁰
^{Sex and Marital Sta}^tus
^{Married 56,9}⁷³^38.6^126,⁴⁶⁹^40,0⁰⁰
^{Single Male}^24,1⁷⁰^21.6^70,4¹⁴^20,0⁰⁰
^{Single Female}^30,9⁶⁶^17.2^43,3³⁶^14,0⁰⁰
^Educ^ation
^{College graduate}^41,0³⁸^47.0^136,⁰⁶⁶^43,0⁰⁰
^{Some college}^20,5⁹⁰^22.9^69,6¹⁹^19,0⁰⁰
^{High School graduate}^34,3⁰⁰^22.0^53,4³⁸^17,5⁰⁰
^{Did not graduate High}^16,1^{81 6.4}^28,7¹³^12,2⁰⁰
^School
^{Household inc}^{ome in 2003}
^{Top income quartile}^27,5²⁵^54.3^159,²⁶⁴^60,0⁰⁰
^{Second income quartile}^27,6⁹²^34.6^63,5³²^21,5⁰⁰

^{Percent that}^{Mean balance}^Median
^{Own a}ⁿ^IR^A^{in all}^{Balance in all}
^{Household head}^{Number of}^{or Keog}^h^IRA/Keogh^IRA/Keogh
^Chara^cteristics^Households^a^Plan^b^Plans^Plans
^{Third income quartile}^28,5⁶⁸^20.6^48,2⁰⁵^17,0⁰⁰
^{Bottom income quartile}^28,3²⁴^7.7^51,9³⁴^11,2⁰⁰
^{Own or rent}^home
^Own^77,4¹⁴^37.8^110,⁷⁴⁷^33,0⁰⁰
^{Rent 34,6}⁹⁵^9.6^43,9⁵⁴^12,0⁰⁰
^Full-tim^{e or part-time worke}^r
^{Not in the labor}^force^26,7³²^24.3^139,⁰⁹³^40,0⁰⁰
^{Full-time 71,4}⁷⁰^30.2^87,7³⁶^26,0⁰⁰
^{Part-time 13,9}⁰⁷^32.2^130,⁸⁰²^42,0⁰⁰
^{Establishment size}
^{Not in the labor}^force^26,7³²^24.3^139,⁰⁹³^40,0⁰⁰
^{Under 2}⁰^em^ployees^25,0⁷⁶^30.0^121,¹⁷⁰^35,2⁰⁰
^{20 to 9}⁹^em^ployees^13,4⁷²^24.9^74,8⁰³^20,0⁰⁰
¹⁰⁰^{to 49}^{9 em}^ployees^12,9³⁹^29.2^78,7⁶²^25,7⁰⁰
⁵⁰⁰^{or more em}^ployees^33,9⁸⁰^33.6^89,3⁴⁷^25,0⁰⁰
^{Union status}
^{Not in the labor}^force^26,7³²^24.3^139,⁰⁹³^40,0⁰⁰
^{Union 12,8}⁶⁸^29.0^50,0¹⁷^16,0⁰⁰
^{Non-union 72,5}⁰⁹^30.8^102,⁶⁶³^30,0⁰⁰
^Total^112,¹⁰^{9 29.0%}^$103,⁸⁹³^$30,0⁰⁰
^Source:^{CRS analysis of the Fed}^{eral Reserve Board’s 20}⁰⁴^{Survey of Consumer Finances}^.
^a.^{All households, in thousands.}
^b.^{Percentage of}^{households in whic}^{h head or s}^pouse^{participated in}^{plan, by ty}^{pe of pla}^n.
Table 7. Household Ownership of Defined Contribution Plans from Current or Past
Job in 2004
^{Percent that}^Mean^Median
^Own^{one o}^r^Balance^Balance
^{Household head}^{Number of}^a^{more DC}^b^{in all DC}^{in all DC}
^Chara^cteristics^Households^Plans^Plans^Plans
^Age
^{Under 2}⁵^24,8⁷⁴^34.1%^$24,1²⁴^{$ 9,9}⁰⁰
^{35 to 4}⁴^23,1¹⁵^45.5^60,6³²^27,0⁰⁰
^{45 to 5}⁴^23,2⁷⁹^44.7^127,¹⁰⁷^50,0⁰⁰
^{55 to 6}⁴^17,0⁸⁶^41.7^202,⁴²⁵^61,0⁰⁰
^{65 or older}^23,7⁵⁵^9.4^119,³⁰⁰^30,0⁰⁰

^{Percent that}^Mean^Median
^Own^{one o}^r^Balance^Balance
^{Household head}^{Number of}^{more DC}^{in all DC}^{in all DC}
^Chara^cteristics^Households^a^Plans^b^Plans^Plans
^Race
^{White, non-Hispanic}^37.6^111,⁶⁰⁵^31,0⁰⁰^80,5¹¹
^{Black, Hispanic, or Asian}^31,5^{98 26.8}^58,1²²^17,0⁰⁰
^{Sex and Marital Sta}^tus
^{Married 56,9}⁷³^43.5^126,⁰³⁴^40,0⁰⁰
^{Single Male}^24,1⁷⁰^31.2^68,7³⁷^15,0⁰⁰
^{Single Female}^30,9⁶⁶^20.9^36,2⁹⁸^13,0⁰⁰
^Educ^ation
^{College graduate}^41,0³⁸^48.0^142,²¹¹^45,0⁰⁰
^{Some college}^20,5⁹⁰^34.4^68,2⁰¹^18,0⁰⁰
^{High School graduate}^34,3⁰⁰^29.5^52,8⁴⁷^18,1⁰⁰
^{Did not graduate High School}^16,1⁸¹^11.5^29,0⁴⁶^12,0⁰⁰
^{Household inc}^{ome in 2003}
^{Top income quartile}^27,5²⁵^62.1^176,¹⁰⁹^74,2⁰⁰
^{Second income quartile}^27,6⁹²^45.7^52,7¹²^20,0⁰⁰
^{Third income quartile}^28,5⁶⁸^25.4^22,2⁸¹^9,90⁰
^{Bottom income quartile}^28,3²⁴^6.2^18,8⁶⁴^2,00⁰
^{Own or rent}^home
^Own^77,4¹⁴^41.0^115,⁶²⁵^35,0⁰⁰
^{Rent 34,6}⁹⁵^20.2^28,7⁵³^9,20⁰
^Full-tim^{e or part-time worke}^r
^{Not in the labor}^force^26,7³²^5.3^106,⁹³⁹^40,0⁰⁰
^Full-time^71,4⁷⁰^48.5^97,6⁰⁷^27,0⁰⁰
^{Part-time 13,9}⁰⁷^19.1^126,⁵³¹^38,0⁰⁰
^{Establishment size}
^{Not in the labor}^force^26,7³²^5.3^106,⁹³⁹^40,0⁰⁰
^{Under 2}⁰^em^ployees^25,0⁷⁶^23.6^92,8⁴⁰^22,9⁰⁰
^{20 to 9}⁹^em^ployees^13,4⁷²^39.5^58,0⁴⁸^14,0⁰⁰
¹⁰⁰^{to 49}^{9 em}^ployees^12,9³⁹^50.9^86,8⁹⁴^29,0⁰⁰
⁵⁰⁰^{or more em}^ployees^33,9⁸⁰^57.5^117,³⁸⁶^34,0⁰⁰
^{Union status}
^{Not in the labor}^force^26,7³²^5.3^106,⁹³⁹^40,0⁰⁰
^{Union 12,8}⁶⁸^51.6^84,4⁶⁷^32,0

^{Percent that}^Mean^Median
^Own^{one o}^r^Balance^Balance
^{Household head}^{Number of}^{more DC}^{in all DC}^{in all DC}
^Chara^cteristics^Households^a^Plans^b^Plans^Plans
^{Non-union 72,5}⁰⁹^42.4^102,⁹⁵²^27,0⁰⁰
^{Total 112,}¹⁰⁹^34.6%^$99,9³³^$28,0
^Source:^{CRS analysis of the Fed}^{eral Reserve Board’s 20}⁰⁴^{Survey of Consumer Finances}^.
^a.^{All households, in thousands.}
^b.^{Percentage of}^{households in whic}^{h head or s}^pouse^{participated in}^{plan, by ty}^{pe of pla}^n.
Most households have wealth other than retirement accounts on which they will be able to draw
during retirement. More than 96% of workers in the United States are covered by Social Security,
and about one-fifth of workers participated in defined-benefit pension plans in 2004. In addition,
many workers have other assets that could be used to pay expenses during retirement. For
example, the most valuable asset owned by many people is their home, and some may find when
they are older that they prefer to live in a smaller house or apartment, or they may choose to move
to an area where property taxes and other living expenses are lower than where they lived during
their working years. In addition to equity in their homes, many individuals have financial assets,
equity in businesses, real estate, or other valuables that can either provide a stream of income
through interest, dividends, or rents, or that can be fully or partially liquidated to finance their
consumption needs during retirement. The broadest measure of net household wealth—the
difference between total assets and total liabilities—is called “net worth.” The median net worth
of all households in the United States in 2001 and 2004, categorized by the age of the household
head, is shown in Table 8.
Table 8. Median Household Net Worth in 2001 and 2004, by Age of Household Head
^(amo^{unts in 2004 dollars)}
^{Age of}^{Household Head}^{Median Net Worth}^{Percent Change}
²⁰⁰^{1 200}⁴
^{Under 3}⁵^yea^{rs old}^$12,3⁰⁰^$14,2⁰⁰^15.4%
^{35 to}⁴⁴^82,6⁰⁰^69,4⁰⁰^-16.0
^{45 to}⁵⁴^141,⁶⁰⁰^144,⁷⁰⁰^2.2
^{55 to}⁶⁴^193,³⁰⁰^248,⁷⁰⁰^28.7
^{65 to}⁷⁴^187,⁸⁰⁰^190,¹⁰⁰^1.2
^{75 or older}^161,²⁰⁰^163,¹⁰⁰^1.2
^{All households}^91,7⁰⁰^93,1⁰⁰^1.5

^Source:^{Bucks, Ken}^{nickell, and Moore,}^{Federal Reserve Bulletin}^{, 2006.}
Between 2001 and 2004, median net worth among all U.S. households (in 2004 dollars) rose by
just 1.5%, increasing from $91,700 to $93,100. Changes in median net worth between 2001 and

2004 differed substantially by the age of the household head. Net worth rose by 15.4% among

households headed by persons under age 35, although this increase amounted to just $1,900
because the net worth of these younger households was quite low to begin with. Among
households headed by individuals between 35 and 44 years old, net worth declined by 16%
between 2001 and 2004, falling from $82,600 to $69,400. There was a small (2.2%) increase in
the net worth of households headed by persons between the ages of 45 and 54. The greatest
increase in net worth between 2001 and 2004 occurred in households headed by persons aged 55
to 64. Among these households, net worth rose from $193,300 to $248,700, an increase of nearly
29%. Households headed by persons 65 or older experienced a very small increase in net worth of

1.2% between 2001 and 2004.

Are Americans saving adequately for retirement? The median retirement account balances
reported on the 2004 Survey of Consumer Finances would not by themselves provide an income
in retirement that most people in the United States would find adequate. Among the 10.8 million
households headed by persons aged 55 to 64 in 2004 and that owned at least one retirement
account, the median balance of all their accounts was $88,000. Moreover, an estimated 6.2
million households headed by persons 55 to 64 years old had no retirement savings accounts in
2004. Including the households with zero balances, a total of 11.7 million households headed by
persons age 55 to 64—68% of all households in this age group—had retirement account balances
of $88,000 or less in 2004. Among the 79.6 million households that included at least one worker
under age 65 in 2004, 33.3 million—or 42%—did not own a retirement savings account of any
kind. The median balance among the worker-households that owned an account was just $35,000.
For workers who are not included in a defined-benefit pension where they are employed—which
is about 80% of all workers—saving from current income is essential to preparing for retirement.
Whether workers save by putting money into accounts that are earmarked for retirement or by
accumulating other assets on which they can draw after they have retired is not necessarily
important. The act of saving is of greater consequence to retirement security than the manner in
which it is accomplished. Nevertheless, the fact that 33 million households that included a worker
under age 65 had no retirement savings accounts in 2004 indicates that many households are not
taking advantage of the tax deferrals available to virtually all workers through IRAs and to many
workers through employer-sponsored plans.
On the one hand, the widespread adoption of tax-favored retirement savings plans over the past
25 years indicates that many workers are taking seriously their responsibility to save for
retirement. On the other hand, the balances in these accounts—even among those who are near
retirement—are generally low. For example, if the median retirement account balance of $88,000
among households headed by persons 55 to 64 years old in 2004 were converted to an annuity, it
would provide a monthly income of $653 per month ($7,836) to a person retiring at age 65. This
amount would replace just 15% of the median income of households headed by individuals who ⁵
were 55 to 64 years old in 2004.
The uncertain future of Social Security and the declining prevalence of defined-benefit pensions
that provide a guaranteed lifelong income have put much of the responsibility for preparing for
retirement directly on workers. The low rate of personal saving in the United States and the lack

⁵^T^h^e^m^e^diaⁿ^inc^o^m^e^of^hous^e^h^old^s^he^a^d^e^d^by^pe^r^s^ons^a^g^e^d⁵⁵^t^o⁶⁴ⁱⁿ²⁰⁰⁴^w^a^s^$53,⁴⁰^0.

of any retirement savings accounts among millions of American households indicate that there is
a need for greater awareness among the public about the importance of setting aside funds to
prepare for life after they have stopped working. Most workers in the United States will need to
begin saving more of their income if they wish to maintain a standard of living in retirement
comparable to that which they enjoyed while working. The alternatives would be to work longer
or to greatly reduce their standard of living in retirement.
Brian K. Bucks, Arthur B. Kennickell, and Kevin B. Moore. “Recent Changes in U.S. Family
Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances.” The Federal
Reserve Bulletin, 2006. http://www.federalreserve.gov/pubs/bulletin/2006/financesurvey.pdf
^P^a^tr^ick^P^u^r^cell
^Specialis^{t i}ⁿ^In^co^m^e^Secu^rit^y
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