The Persistence of Extreme Retirement Inequality

March 18, 2019

ReLab's study of retirement wealth inequality between 1992 and 2010 finds that the retirement system is failing everyone, with those at the bottom suffering the most. This article has been accepted for publication in a revised form in the journal of Pension Economics and Finance. Our corresponding policy note, "Extreme Inequality is Persistent, Even Among Those With Similar Earnings," discusses policies to address the inequalities baked into our system.


 1. Inequality Persists

  • Inequality increased between 1992 and 2010. Among workers approaching retirement in 1992, the bottom quintile of earners held 2% of retirement wealth and the top quintile 50%. By 2010, the bottom quintile held 1% and the top quintile 49%.
  • Focusing on dollars rather than shares of wealth between 1992 and 2010, the wealth of bottom quintile earners declined, whereas the wealth of middle and higher earners increased - but often by amounts insufficient to offset increases in earnings and longevity.
  • Between 1992 and 2010, the median wealth of bottom quintile earners declined from $1,800 to zero, and the median wealth of top quintile earners increased from $175,500 to $294,700, in $2010.
  • An increasing share of low earners are arriving at retirement with zero wealth (up from 45.4% to 51.2% between 1992 and 2010), whereas almost all high earners continue to have some wealth at retirement (98.8% in 1992 and 97.8% in 2010).

2. A Collapsing Floor

  • Persistent inequality in retirement wealth reflects the common plight of low to moderate earners with very little retirement wealth, not the outsize accumulations of the few (eg. Mitt Romney’s IRA.).
  • Most higher earners don’t have enough to maintain living standards in retirement, but those at the bottom are falling even further behind.

3. Inequalities Among Workers with Similar Lifetime Earnings

  • High levels of retirement wealth inequality are present even within groups of workers with similar lifetime earnings. In the top earnings quintile, the 90th percentile of the distribution of retirement wealth is $837,800, compared with $97,700 at the 10th percentile.
  • Many workers, even with high lifetime earnings, fail to navigate an individualized retirement system that contains many pitfalls for the unwary.

Authors: Teresa Ghilarducci, Siavash Radpour, Anthony Webb
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Suggested Citation: Ghilarducci, T., Radpour, S. and Webb, A. (2019) “Retirement Plan Wealth Inequality: Measurement and Trends.” Schwartz Center for Economic Policy Analysis and Department of Economics, The New School for Social Research, Working Paper Series 2019-1.