Did you hear about the one that claimed an “average” American worker has less than $1,000 saved for retirement?
Well, here’s hoping you didn’t — that your day was occupied with real issues, or perhaps even better that you saw the headline, recognized it for the ludicrousocity[i] of the claim, and scrolled on without clicking, sharing, or commenting.
But some didn’t. Drawn like a moth to a flame (or perhaps more precisely, gooseneckers at the scene of a horrific accident), some likely did click, if only to see the preposterous assumptions and/or incredulous inverse compounding applied to create such a ridiculous conclusion.
The CBS report cites “research” (and I use that term loosely here) by the National Institute on Retirement Security (NIRS) which — if one has paid attention to its previous outputs might more credibly be called the National Institute on Retirement INsecurity. I say that because the organization — which labels itself “nonpartisan” — nonetheless, and unapologetically definitely has a mission. That mission is the promotion of defined benefit plan designs — and while there’s nothing wrong with that, in the absence of good positive private sector trends to highlight there, they instead tend to find ways to bash what has become the nation’s retirement plan design alternative — the 401(k).
As for this most recent attempt,[ii] you don’t have to dig deep, or delve into footnotes to see just how data was convoluted to derive that click-bait crafted outcome. They simply took data from what appeared to be a reliable government source — though it happens to be a self-reported number of accumulated savings[iii] taken by the government — for all employed adults aged 21-64. Yes, you read that correctly.
Oh, and then picked the median of that wildly diverse range of experiences.
So — you take the accumulated savings of a 21-year-old — and mush it together with that of someone on the brink of retirement…. Honestly, you can stop right there, and know that this is a stupid, although ostensibly mathematically accurate, result. Seriously. You might just as well take the mid-day temperature of the Sahara Desert, the midnight temperature of Antarctica, add them together and to derive the temperature in Omaha, Nebraska.
And yet, that’s the kind of math that is the basis for the headline.
Then, presumably to provide some “balance,” NIRS produced a median number for those who had some retirement savings — again, though — every worker from age 21-64 — and provided a median of $40,000.
But again, a mathematically accurate result[iv] that tells us…nothing.[v]
To its credit, the NIRS report itself (eventually) acknowledges what actually matters: access to a workplace retirement plan, the need to address Social Security’s funding shortfall, and the drag student loan debt places on retirement readiness.
But those realities are buried beneath a click-bait headline built on a median so broad as to be meaningless. That isn’t analysis — it’s alarmism dressed up as math. And while it may generate attention, it amounts to click-bait journalism enabled by irresponsible and misleading “research.”
Don’t fall for it — and by all means, don’t spread it around.
- Nevin E. Adams, JD
[i] Yes, it’s a made-up word.
[ii] See Retirement in America: An Analysis of Retirement Preparedness Among Working-Age Americans - NIRS.
[iii] Andrew Biggs notes that in this data sampling from the Survey of Income and Program Participation (SIPP), the bottom quintile of earners have median annual earnings of just about $20,000 even for those aged 35 and over. In other words, these are people who are barely working – very few hours and weeks worked, typically at very low wages. See Does the typical American have only $955 saved for retirement?
[iv] One assumes, but considering the logic in the compilation, it may bear double-checking.
[v] The CBS report went further, of course — just in case you weren’t panicked enough, they juxtaposed the bizarre medians noted above with some generalizations about how much income you’d need in retirement, layered it in with worries about Social Security (and some exaggerated assumptions on how much/many Americans rely heavily on it), and even threw in a reference to Trump Accounts to generate even more clicks.
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