The Current State of Americans’ Retirement Plans

New York, January 08, 2010

The economic shocks of the past 18 months have shown it is time to address serious shortcomings in our nation's approach to retirement savings.

Research from McKinsey & Co. finds that the average American family will face a savings gap of $250,000 at the time of retirement.1 Even with payments from Social Security and pensions, as well as personal savings in 401(k) and other retirement plans, the average family will have only about two-thirds of the income it will need.

America needs a holistic retirement system that helps people build financial security that lasts a lifetime.

“It’s time to think of 401(k)s as income in retirement accounts, and to begin with the end in mind, by asking how much income in retirement people need,” said Roger Ferguson, TIAA-CREF’s chief executive.

A holistic system would:

  • Ensure full participation and sufficient funding by enrolling employees automatically on their first day of work.
  • Offer incentives for employers and employees that encourage total contributions between 10 and 14 percent of pay – about double today’s savings - helping individuals reach a target of replacing 70 percent of their pre-retirement income.
  • Help workers manage risk by offering a menu of 15 to 20 investment options to provide sufficient diversification without presenting an overwhelming number of choices.
  • Give workers financial education and objective, noncommissioned advice to help them build a portfolio that reflects their goals and risk tolerances.
  • Provide opportunities and incentives to save for retirement medical expenses.
  • Provide lifetime income through an affordable fixed annuity option.
“I believe a social contract exists in this country to help our colleagues, our neighbors, and our fellow citizens get safely to and through retirement,” said Mr. Ferguson.

As the largest private retirement system in America, TIAA-CREF provides more than $10 billion in retirement income, guaranteed lifetime income2 and other payments to 500,000 participants each year.

Additional resources:

The News Hub: Crisis Shows Flaws in Retirement System”, The Wall Street Journal, December 21, 2009

It’s Time to Rethink Our Retirement Plans”, The Wall Street Journal, November 13, 2008

Retirement Security, Guaranteed”, The Huffington Post, October 1, 2009

Remarks by TIAA-CREF’s Roger Ferguson to the ACLI, October 19, 2009

TIAA-CREF CEO Roger Ferguson Calls for a Holistic American Retirement System, October 19, 2009

TIAA-CREF ( is a national financial services organization with more than $402 billion in combined assets under management (9/30/09) and the leading provider of retirement services in the academic, research, medical and cultural fields.

Media Contact:

Abby Aylman Cohen, Manager, Corporate Media Relations, 212 916-4381 Cell: 917 596-4758

Jennifer L. Compton, Sr Media Relations Officer, Corporate Media Relations, 212 490-9000, ext. 3486 Cell: 917 597-8896

1 “Restoring Americans’ Financial Security: A Shared Responsibility,” McKinsey & Company, October 19, 2009.
2 Subject to TIAA’s claims paying ability.

TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.

Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association (TIAA) and College Retirement Equities Fund (CREF), New York, NY.

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