Key Issues > Financial Security for Older Americans
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Financial Security for Older Americans

Increased life spans, the impending retirement of the baby-boom generation, and the effects of the recent economic downturn on retirement savings, have all added to the challenge of providing retirement security for older Americans.

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Providing financial security for older households in the United States has traditionally been a shared responsibility of government, employers, and individual workers. However, increased life spans and the impending retirement of the baby-boom generation have resulted in major policy and administrative challenges to the federal government in the short-term and long-term management of this responsibility. High unemployment and slow market recovery in the wake of the recent economic downturn have put added strain on efforts to provide financial security for older households. While the recession has affected all age groups, older adults—particularly those close to or in retirement—may face a greater burden because they may not have the same opportunities to recover from its effects.

Figure 1: Average Income by Source for Older Households in the Lowest, Middle, and Highest of Five Income Groups

Average Income by Source

Source: GAO and SSA analysis of 2008 income data from the March 2009 U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplement.

As a result, the need for options and strategies to help individuals ensure financial security for themselves and their families as they enter their retirement years has become even more important than in the past. For example:

  • The financial shortfall facing Social Security. Although the Social Security trust funds are not expected to be depleted until sometime after 2030, the strains on government finances have already begun, with Social Security paying out more than it takes in each year. It will be important for policymakers to take the steps necessary to achieve the desired balance between income adequacy and individual equity, while also moving toward program solvency.
  • The declining security of employer-provided pension plans. Participation in employer-sponsored pension plans hovers at about half of the total private-sector labor force, despite tax incentives and initiatives such as automatic enrollment and automatic IRAs. Policymakers will need to consider how to best encourage expanded pension coverage, adequate and secure pension benefits, and more effective use of tax preferences to foster workersÂ’ retirement security.
  • The growing responsibility for individuals to plan and manage their retirement. Ensuring the financial literacy of older people has become particularly important given the transition to a financial account-based retirement system, the increasing responsibility of individuals to manage their assets in retirement, and understand key factors that can affect their retirement income. Policymakers will need to examine the effectiveness of services and protections provided to individuals at older ages.

Figure 2: Hypothetical Projection of Monthly Retirement Income for a 65-Year-Old 401(k) Plan Participant

Retirement Monthly Income

To see the effect that various factors can have on retirement income from three main spend-down options, see the interactive retirement model available at

Looking for our recommendations? Click on any report to find each associated recommendation and its current implementation status.

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Many Experience Challenges Regaining Employment and Face Reduced Retirement Security
Published: Apr 25, 2012. Publicly Released: May 15, 2012.

Private Pensions:

Better Agency Coordination Could Help Small Employers Address Challenges to Plan Sponsorship
Published: Mar 5, 2012. Publicly Released: Mar 7, 2012.

Retirement Income:

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Private Pensions:

Some Key Features Lead to an Uneven Distribution of Benefits
Published: Mar 30, 2011. Publicly Released: Apr 29, 2011.

Social Security Reform:

Raising the Retirement Ages Would Have Implications for Older Workers and SSA Disability Rolls
Published: Nov 18, 2010. Publicly Released: Nov 18, 2010.

More Reports

Private Pensions:

Targeted Revisions Could Improve Usefulness of Form 5500 Information
Published: Jun 5, 2014. Publicly Released: Jul 7, 2014.

Retirement Security:

Oversight of the National Railroad Retirement Investment Trust
Published: May 15, 2014. Publicly Released: Jun 16, 2014.

Retirement Security:

Challenges for Those Claiming Social Security Benefits Early and New Health Coverage Options
Published: Apr 23, 2014. Publicly Released: May 27, 2014.

2014 Annual Report:

Private Pensions:

Pension Tax Incentives Update
Published: Mar 20, 2014. Publicly Released: Apr 21, 2014.

Retirement Security:

Trends in Marriage, Work, and Pensions May Increase Vulnerability for Some Retirees
Published: Mar 5, 2014. Publicly Released: Mar 5, 2014.

Retirement Security:

Trends in Marriage and Work Patterns May Increase Economic Vulnerability for Some Retirees
Published: Jan 15, 2014. Publicly Released: Feb 26, 2014.

Private Pensions:

Clarity of Required Reports and Disclosures Could Be Improved
Published: Nov 21, 2013. Publicly Released: Dec 17, 2013.

401(k) Plans:

Other Countries' Experiences Offer Lessons in Policies and Oversight of Spend-down Options
Published: Nov 20, 2013. Publicly Released: Dec 16, 2013.

Private Pensions:

Revised Electronic Disclosure Rules Could Clarify Use and Better Protect Participant Choice
Published: Sep 13, 2013. Publicly Released: Nov 5, 2013.


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Examples of Financial and Reemployment Challenges Long-Term Unemployed Older Workers Face
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    • Charles Jeszeck
    • Director, Education, Workforce, and Income Security Issues
    • (202) 512-7036