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Personal savings accounts, such as 401(k)s, are failing retirees, study says

By JJ Feinauer

Deseret News

Published: Thursday, Sept. 5 2013 2:00 p.m. MDT

According to the Economic Policy Institute, personal savings retirement plans, such as 401(k)s, are failing those who need retirement funds the most.

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The move from pension plans to individual savings accounts — such as a 401(k) — has failed to strengthen savings for underprivileged retirees, according to a study by the Economic Policy institute, a liberal think tank based in Washington, D.C.

The study examines disparities in retirement preparedness and outcomes, exploring what the institute believes to be the growing problem of retirement inequality.

To clarify the research much of the report is comprised of charts displaying the overall trends of the findings, breaking the statistics down into five basic categories: Differences in income, race and ethnicity, education and sex and marital status.

The three charts displayed below illustrate some of the core findings included in the report:

As this graph shows, the most dramatic increase in retirement savings as a result of the shift to individual savings accounts has occurred among those with a college degree or more. This graph is one of many the institute uses to argue that personal savings accounts primarily benefit those who already have an economic advantage.

According to the study, "black workers' participation in employer-based retirement plans, including defined-benefit pensions, used to be similar to that of white workers, but has lagged in recent years." Hispanic workers, who have historically had low participation rates, have fallen even further behind.

When it comes to marriage and gender, the Economic Policy Institute found that those who are unmarried tend to have less in retirement savings than those who are, particularly when it comes to women.

You can read the full study with all charts included at the Economic Policy Institute's website.

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