Mercer Report Warns of Future $137 Trillion US Savings Gap

Report cites empty promises from Social Security, DB programs as the cause.

Unless action is taken, the US’s long-term savings gap may grow to $137 trillion by 2050, according to a report by Mercer.

The US long-term savings gap currently sits at $28 trillion. The report says that the problem is due to promises made to citizens and employees through the Social Security program and corporate defined benefit programs that are difficult to meet.

In addition, “increased longevity and more stringent accounting standards” have made DB plans more expensive—causing for employers to slowly transition away from them.

This puts additional pressure on individuals to save and fund their own retirements, which means fewer and fewer successful retirees in the future due to the lack of saving vehicles, an unequal distribution of wealth and income, and low personal saving rates.

However, the report does say that the US has the tools—wealth, moderate economic growth, and an influx of immigrants adding to the workforce and birth rates—to avoid this sentence, but it expresses concern over whether the US “will find the political will to do so.” If nothing is done, the report warns that the majority of the population will be pushed below the poverty line in old age in addition to the creation of insurmountable debt.

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