Retirement Accounts Are Flush for Millions of Older Americans

What You Need to Know

Vanguard research found the top 5% of income earners among baby boomers had a savings surplus of almost 30%.
Stock-market gains have helped bolster retirement savings for most older Americans, though the gap between upper-income earners and those at the bottom has grown.
The value of equity and mutual fund holdings among those at least 55 years old have climbed $5.5 trillion in the past year.

The bull market in U.S. stocks has fattened retirement accounts for millions of older Americans, with many at the top of the income ladder having built up savings that far exceed their expected spending needs.

An analysis by Vanguard researchers on retirement readiness of baby boomers found that the top 5% of income earners had a savings surplus of almost 30%. The retirement outlook improved for all but the bottom quartile of wage earners, though a savings gap still exists.

The improvement in retirement readiness is encouraging, Kelly Hahn, Vanguard Investment Strategy Group’s head of retirement research, said in a blog post. “We see a meaningful improvement in retirement readiness for many baby boomers.”

Stock-market gains have helped bolster retirement savings for most, the gap between upper-income earners and those at the bottom has grown. Workers in the bottom quartile face a savings gap of 36% between their sustainable replacement rate and their expected spending needs.

“Because the market gains disproportionately benefited high earners with the most wealth and highest equity allocations, the disparity in retirement readiness between low- and high-income earners has widened,” said Hahn.

For median income earners, the retirement savings gap narrowed eight percentage points to 25%.