Thursday, July 23, 2015

Puerto Rico, Bankruptcy and a New American Conscience


Greece has stolen the headlines lately, as the European Union and the IMF try to find a solution to the country's mountain of debt and depression like economy. Unfolding on a smaller stage, though, is the looming bond default by the island of Puerto Rico.  A default, restructuring, or "re-profiling" of the Commonwealth's debt holds the potential for significant losses for the holders of the island's $72 billion of US tax-exempt bonds.  And no sooner did the island's Governor, Alejandro GarcĂ­a Padilla, publicly declare the debt to be "unpayable" last week , than did the island government fail to make payment on $93.7 million of bonds of its Public Finance Corporation.

Lawmakers in Washington, finally coming to grips with the realization that the Puerto Rico debt crisis is real, hurried a bill into Congress designed to amend the federal Bankruptcy Act, offering a special exception for the island. Puerto Rico, like the many states in the US that are imperiled by looming pension obligations and stagnant revenues, is not authorized to file bankruptcy under current law. Chapter 9 of the Bankruptcy Act limits filing to US cities, counties and special districts. Chapter 9 was the body of law under which the cities of Detroit, Stockton, Vallejo, Central Falls, Harrisburg and San Bernardino recently took refuge, as they attempted to squeeze their way out of contracted and publicly approved municipal debt.

Unlike those cities, however, where the outstanding bonds were largely held by municipal bond insurance companies, banks and large institutions, the massive debt of Puerto Rico is widely held, often directly by individuals. It is also held in varying degrees by an estimated 377 national municipal bond funds of which the public may be invested. When the bonds in question in prior bankruptcies were guaranteed by bond insurers or banks, it was surprisingly easy for public opinion (as well as that of the courts) to be complacent with default. After all, if there were losses, they deserved it. The bondholders were (mistakenly) considered part of the same Wall Street machine that many (also mistakenly) believe caused the Great Recession.

But the challenges with Puerto Rico bonds are far different, at least from a basis of public perception. Different that is, if you or someone in your family is invested in one of those 377 bond funds. An estimated $11 billion of the total Puerto Rico debt is held by these funds. An additional $45 billion is held by individuals directly, mostly Puerto Rico and US mainland residents. Perhaps unaware or unmoved by this subtlety, Chuckie Schumer, the venerable New York Senator, was quick to champion the cause of Puerto Rico bankruptcy, introducing the aforementioned legislation into Congress last week. True to his base, Schumer was likely more focused on the fact that New York is the largest home to people of Puerto Rico descent, outside the island itself. Presidential candidates, Hillary Clinton and Bernie Sanders were also quick to jump on board, not missing the relevance of New York and Florida voters (the next most populated Puerto Rican state) to their political campaigns.

But this is politics. We try not to set the bar too high. More disturbing, though, is popular opinion. If you read the news media and follow the comments on blog posts, it appears most Americans, or at least those frequenting these site, support the idea of allowing Puerto Rico to declare bankruptcy. Let's face it, if the island can't pay, bankruptcy is far less costly to the taxpayer that a bailout.  As to Washington, it presents the potential for votes and no cost. That's the motherlode in politics. But the public, more broadly, appears to support this view as well.  Who cares if bond investors take one between the eyes?  Unless, of course, it's your eyes.

This raises the broader question, though, is America's willingness to change its bankruptcy laws for Puerto Rico an example of our changing social mores?  Is it now ok not to repay one's debts; that is, as long as it's someone else's money that's not being repaid? Has default become the new black?

Thursday, July 9, 2015

What's Wrong with Bernie Sanders' Plan on Social Security and How to Fix it

Presidential candidate Bernie Sanders has done an outstanding job of highlighting the current retirement crisis. He's put forth a fairly credible plan for expanding Social Security, currently threatened with insolvency by 2033. The full text of Senator Sanders' plan, as presented to a Senate hearing in 2011, can be found here and in the Senator's Social Security Expansion Act submitted to Congress in 2015.

Senator Sander's plan is now gaining media attention and a loyal following by Social Security advocacy groups. It relies on promoting the continuing availability of Social Security funding, almost exclusively, through lifting the cap on annual wages subject to the FICA payroll tax, (currently $118,000). US Treasury Secretary Jack Lew actually has a plan to divert a greater portion of the existing FICA tax, in order to fund the disability portion of the Social Security Trust Fund, or OASDI (with the disability program expected to reach insolvency by next year).

As the Senator claims, it is true that a vast amount of wage income passes through private incomes that is not subject to the FICA tax. In fact, IRS data for 2012 shows just under 21 million individual tax returns, or 22% of the total taxable returns filed, with adjusted gross incomes greater than $200,000. A total of 392,850 returns filed showed AGI of greater than $1 million. For these individuals, upwards of 90% of their income is exempt from the FICA tax.

But research indicates that removing the cap on wages subject to the payroll tax would only delay the date of insolvency of the Social Security Trust Fund by a few years. Moreover, by 2035, the Trust Fund would still only be able to pay 85% of projected benefits (rather than the 75% that the Social Security Administration currently estimates).

This brings us to the first point about the projected insolvency of Social Security. Many are now arguing, including Senator Sanders, that in 2033, Social Security won't be bankrupt or insolvent, but rather, that the fund will only be able to pay 75% of projected retiree benefits. Sorry folks, but it's the same thing. When a corporation, government or private individual files for bankruptcy it doesn't mean that they have zero in the bank. Rather, it means that the company's debts or payment obligations exceed their assets or ability to pay their liabilities as they come due. The company is thus considered insolvent. Let's not needlessly confuse the issue with semantics.

That being said, the Senator is entirely correct in his premise that something must be done now given the current level of personal retirement savings, the dramatic abandonment of defined benefit pension plans by Corporate America and the fact that 35% of Americans in retirement rely solely upon Social Security for their income. Like it or not, reforming Social Security is the only place for America to take such remedial action.

But here's what Bernie Sanders has left out of his plan. First, in order to achieve long term stability for Social Security in the face of highly unfavorable demographics, we need to delink Social Security from the payroll tax. Americans need to begin to realize that they haven't paid into a pension plan, for which everyone will receive proportionate dividends in their retirement. In other words, Social Security needs to be means tested. There's no reason why the government needs to pay retirement benefits to Bill Gates. He's fairly well prepared for the expenses of retirement.

Second, while lifting the payroll cap is a good start, ultimately Social Security will also need to be delinked from the tax and the idea that the program can be self-funded. Many nations around the world, including Australia, operate pension plans that are general budget items. Australia's Age Pension System has operated this way for many years and is consistently ranked as one of the world's most successful retirement systems. These and other changes to the Senator's plan can and should be made now, to provide an approach that will restore the solvency of Social Security for future generations.

If you'd like to read more about the retirement crisis and the way to solve it, please check out my new book, "Up in Smoke: How the Retirement Crisis Shattered the American Dream", now available on Amazon, iTunes, Barnes and Noble and other ebook retailers.

Wednesday, July 1, 2015

Pensions Liabilities Force Layoffs at Chicago Public Schools

Buried beneath the glaring headlines of the debt crisis of Greece and Puerto Rico, lies the under-reported story of the public pension and debt crisis of the Chicago Public School System (or CPS). Facing massive public employee unfunded liabilities and a judicial climate unsupportive of reform, the bonds of CPS, along with those of the City of Chicago were downgraded by Moody's Investors Service to junk bond status this past May. Moody's took the action almost immediately following a landmark decision on public employee pension reform by the Illinois State Supreme Court.

The court struck down a pension reform measure passed by the Illinois legislature in 2014 designed to stem the hemorrhaging of funds to address the state's severely underfunded public employee retirement system. The pension reform plan included provisions to eliminate an annual cost of living adjustment of 3%, while boosting public agency contributions to the system, in an effort to bring the struggling state pension plan to 100% funding in thirty years

As to Chicago Public Schools, the Moody's action downgraded $6.2 billion of bonds to junk status. Citing its public employee pension exposure, the rating agency pointed to the stunning growth in CPS' annual pension funding requirements, from $197 million in 2013, to $634 million in 2015.  It is that latest pension payment of $634 million that gave rise to the recent funding crisis for CPS,as the district found itself simply unable to pay. With the deadline for the contribution of June 30 approaching and no extension possible, CPS sought a variety of measures to help it keep from default on its pension contribution.

When the smoke cleared last night, the payment was made, but we now learn at the expense of 1,400 salaried positions at the School District. In reporting on its plan to make payment on its public employee pension obligation, CPS made mention for the first time of its plan to eliminate 1,400 positions in an effort to reduce expenses by $200 million to bring its budget back within its limits. Faced with a sudden and previously unannounced plan to lay off teachers, the President of the Chicago Teachers Union claimed, " Mayor Emmanuel's handpicked board has led this district over a financial cliff."

Unfortunately, this may not be the last time we hear these or similar criticisms of local government in the years ahead. CPS will have a payment of this or larger proportions in 2016, as well.

Thursday, June 25, 2015

Oakland, CA and the Public Pension Crisis

When I started out researching the finances of the City of Oakland, I fully expected to end up in a very different place than where this story actually ends. I knew that Oakland was struggling with pension liabilities so I thought by chronicling the effect of growing pensions on the city's finances, I might create a reasonable case study of how public employee pensions are weighing on mid-sized American cities.

If we step back to 2001, the city made contributions to CalPERS, the statewide pension administrator, of $24 million, funding 100% of it annual pension contribution or APC. Its net pension obligation was zero. Pension costs for the city's FPRS closed-end pension plan were funded in 1997 by way of a cash contribution of $22.8 million, and supplemented in that year by the proceeds of a pension obligation bond (POB) of $417 million. As a result, the program was projected to be fully funded through 2011 (although its unfunded pension obligation should be adjusted to include the $417 million of unpaid bonds).  

By 2005, however, an unfunded actuarial accrued liability (UAAL) appeared in FPFS of $268 million and its funded status had dropped to 69%. At the same time, the city's CalPERS account showed a combined UAAL of its public safety and miscellaneous employees plans totaling $370 million. The city's annual contribution to PERS had grown from $24 million in 2001 to $87.5 million by 2005, an increase of 265% in just four years. Over the same period, the city's general fund revenues had only grown by just 34%.

By 2014, the city's pension liabilities would begin to look downright ominous. The UAAL of FPRS had declined to $230 million, representing the closed-end nature of the plan and the smaller retiree population covered by the plan. Nonetheless, its funding status had fallen to 64%. And the city's combined PERS liability for its safety and miscellaneous plans had now grown to a staggering $1.13 billion, or nearly four times the size of its payroll. It's annual PERS costs had risen to $98 million.

Now, I know what you're thinking. What about the debt service on all the POBs that the city had issued to fund its UAAL. The city issued $417 million of POBs in 1997 to fund a deposit to FPRS and, in 2012, another $212 million to refund, in part, the 1997 bonds. The debt service on these bonds totalled $50 million in 2014. So this number should effectively be added to the $98 million PERS costs mentioned above, producing adjusted annual pension expense for the city of $148 million in 2014.



So this is about where I thought this story would end. The city's annual pension costs had risen from $66 million in 2001 to $148 million in 2014 (inclusive of debt service on POBs), while its unfunded pension liability had grown from $417 million to $1.7 billion (inclusive of POBs). But here's what I didn't expect to find: how well the city administrators and elected officials would address these costs.

Oakland, like many cities in California and across the country, is still struggling to recover from the 2008 recession. For Oakland, property tax revenues lost following the recession did not recover to their 2008 levels until 2013. Today, six years after the recession, Oakland property tax revenues remain just marginally higher than in 2008. Sales tax and state directed motor vehicle license revenues still haven't climbed back to their pre-recession levels. Revenues, overall, are now only modestly higher than their peak. Nearly all of the revenue gain came on the basis of locally enacted taxes for business licenses, utilities, real estate transfer, transit occupancy, parking and franchise taxes.

So here's the unexpected ending to the story. Clearly, Oakland still faces extraordinary unfunded pension liabilities in the face of limited revenue growth, all of which is pressuring its budget and bond credit ratings. But the city has managed to dramatically reduce the size of its budget to live within its means. In fact, its general fund expenses in 2014 were below those of 2008, allowing the city to record an $8.2 million addition to fund balances. The city accomplished this no small feat with the reductions coming largely from general government, allowing the restoring of funds for pubic safety to pre-recessionary levels.

What the future now holds for Oakland and other US cities is predicated on assumptions for economic growth that cannot be known. At thee same time, pension expense will most surely grow, irrespective of revenue growth, as a function of salary increases, enhanced benefits and demographics. Not a pretty picture, yet thus far, the city has done an extraordinary job of containing the damage.


Monday, June 22, 2015

What's Wrong with Social Security and Why it's Important to Gen X and the Millenniums- Part Two

We're all familiar with the payroll taxes that support Social Security, simply by looking at our pay stubs. FICA taxes, or required employee and employer payments under the Federal Insurance Contributions Act, provide the foundation of financial support for Social Security. 

The total FICA tax is evenly split between the employer and the employee, with each paying a tax equal to 6.3% of earned wages for a total of 12.6% (as of 2014). The payments are directed to the Internal Revenue Service and then paid into the Social Security Trust Fund (also known as the Federal Old Age and Survivors Insurance Trust) where they are administered by the Department of Treasury.

For many years, approximately 70, the system worked just fine with annual inflows to the Social Security Trust Fund from taxes and interest, exceeding outflows, in the form of benefits payments to retirees and the expenses of running the system. But in 2013 these lines would begin to cross as the number of program beneficiaries would rise to 62 million, and outflows would exceed inflows. The deficit of the Trust Fund in that year would total $75 billion, a level at which deficits are projected to continue through 2018 (whereafter they are projected to spike sharply upwards).

The problem with all of this is largely the basis of accounting by which the Trust Fund is managed and operated. Unlike defined benefit plans run by corporations and governed under ERISA, no such regulation guides the planning, management and investment of Social Security. Social Security today runs as it always has, as a PAYGO system. Revenue flows in from taxes paid by current workers (and employers) and flows out to retirees and services, each on an annual basis. In effect, we are borrowing from Peter (today's workers) to pay Paul (retirees). Some refer to this as a Ponzi Scheme, although that's perhaps a bit too harsh. Nonetheless, this is essentially how the system functions.

Under ERISA, companies are required to retain actuaries to quantify the present value of future, accrued benefits. They are then required to invest to meet those future liabilities. But this is not at all the way Social Security works. And it's this failure to to do so, that has allowed the Trust Fund to rise and fall with demographics. It's almost as if we knew this day of reckoning would come, when demographics would threaten the solvency of Social Security, but no one ever chose to address it.

Today Social Security reform is the third rail of politics. Everyone knows some level of reform is necessary, but to propose any modification prompts outright ridicule. Yet, with the median retirement savings of 55-64 year olds only $14,000 this generation, like those currently in retirement, will need to receive Social Security benefits just to make ends meet.

If you are interested in reading further about this topic, a full plan for Social Security reform is presented in my new book, "Up in Smoke: How the Retirement Crisis Shattered the American Dream". You can access it here.

Wednesday, June 17, 2015

CBO 2015 Long Term Budget Outlook


A new report of the Congressional Budget Office was just released. The report projects future budget deficits for the Federal Government through 2040. 

The report highlights future growth in spending on Social Security and health care as two principal drivers in growing deficits. Spending on these two programs alone is expected to grow from its current level of 10.1% of US GDP to 14.2% by 2040.

With current law unchanged, the CBO projects that total federal tax revenue will grow as a percentage of GDP from 17.7% in 2015 to 19.4% by 2040. At the same time, federal spending is projected to grow from 20.5% of GDP in 2015 to 25.3% in 2040. And therein lies the rub. Expenditure growth at rates considerably in excess of that of revenues. I guess you could say the government loses money on every dollar and can't make it up on volume. 

Annual budget deficits are projected to grow from 2.7% of GDP in 2015 to 5.9% by 2040. With growing deficits, the CBO forecasts that total federal debt will exceed 107% of GDP by 2040. Now this raises an important point about how various government agencies and economists measure total US debt and its relationship to GDP. 

According to data of the Federal Reserve Bank, as shown in the chart above, total debt to GDP already exceeds 100%. So why is there a discrepancy in the CBO report? It's a question of whether debt is measured on a gross or net basis. Since a healthy chunk of US Treasury debt is owed to Social Security and other federal programs, like Medicare, this portion of the debt is often netted out, under the theory that "we" owe it to ourselves.

Well, perhaps, but if you are now or are expected to be a recipient of Social Security or Medicare benefits, then it's owed to you. The Social Security Trust Fund is now the world's largest holder of US Treasury obligations, some $2.7 billion of them. The CBO report projects the Trust Fund to become insolvent by 2029. In the CBO's 2008 long term outlook, Social Security was expected to remain solvent until 2050. 



Monday, June 15, 2015

What's Wrong with Social Security and Why it's Important to Gen X and the Millenniums- Part One


The Social Security Administration (SSA) in its 2014 report to Congress, projects the Trust Fund supporting the Social Security System will be insolvent by 2033. The SSA has provided reports like these for many years, with its 2010 report showing a projected date of insolvency of 2040. A 1983 report pointed to a date of 2058. By now, you can see where this is headed.

The Trust fund supporting Social Security is actually referred to as the OASDI fund, and covers both Social Security benefits and also payments under Disability Insurance. With a rapid escalation of disability claims over the past number of years, the disability portion of the Trust Fund is now projected to reach its point of insolvency next year (a date pulled in from 2018 in the 2010 report).

Both programs have seen rapid growth and accelerated outflows since 2008, explained, only in part by demographics and an aging population. Disability has grown dramatically, with roughly ten million people claiming benefits under the program. Its share of the adult population has doubled over the past twenty years, despite advances in medicine and a generally healthier population. Today, the Federal Government spends more on disability payments than on food stamps and welfare combined.

The growth in Social Security claims, as well, can only partially be explained by the aging baby boomer generation. Benefit claims following the financial crisis grew at a rate exceeding forecasts of the Social Security Administration based upon their demographic models. Despite the steep discount to future payments by taking early benefits, this trend has also now been underway for several years.

Many members of Generation X dismiss the whole notion that Social Security will be there for them in their retirement, or that a retirement as most know it, will even be available.  They often fault the baby boomers for the problem, citing over-spending and under-saving as contributing to the retirement crisis. While, in part, this may be true, the problems with Social Security are much more dramatically a problem of mathematics - or demographics, specifically.

In 1940, soon after Social Security began, there were roughly 35 million workers paying into Social Security and only 222,000 beneficiaries (or a ratio of workers to retirees of 159 to one). By 1950, that ratio had fallen to 16 to one, and by 1990, the ratio had declined to three to one. By 2031, it's projected that only two workers will pay into the system for each person collecting benefits.  

All of this, of course, had been forecast by the Social Security Administration many years earlier. But Congress, increasingly focused on their own needs and less and less on the job of actually running the country, largely chose to ignore it. Concerns about an aging population and its impact on Social Security emerged as far back as the early 1980s. Congress then acted to pass HR 1900, the Social Security Amendments of 1983 in an effort to shore up the system. Payroll taxes were raised and benefits, for the first time, became subject to taxation. While they were at it, Congress also thoughtfully moved to add benefit coverage under Social Security to members of Congress, the White House and other executive level appointments. 

But no sooner did surpluses materialize, then Congress found a way to spend the new found cash flow, by borrowing back surpluses of the Social Security Trust Fund, and swapping special issue Treasury Bonds in its place. In fact, this has been the practice for many years. In good years, when Social Security is recording a surplus, the extra cash is borrowed against Treasury bonds. In deficit years, as the Trust has seen for the last several, the shortfall is funded, once again, with Treasury bonds.

It's little wonder then, that the world's largest holder of US Treasury obligations is not China or Japan. It's not even the Federal Reserve. It's the Social Security system. And lest we forget, a Treasury bond is nothing more that a promise to pay from future tax revenue. What that means is that the government will need to raise tax revenue in the future to make good on its promise to pay some $2.8 trillion of obligations to the Social Security system, just for the program to remain on track for insolvency in 2033.




Thursday, June 11, 2015

Taper Tantrum Part Deux

Investors may claim to be taking the prospects of a Fed rate increase in stride, but something has clearly triggered the selling of mid to long term Treasury bonds. It was reported yesterday that PIMCO's Total Return Fund, one of the world's largest holders of US Treasuries, unloaded a sizable portion of its stake in Treasuries, lowering their share of the Fund's assets to 8.5% from 23% this past April.

With $107 billion in assets, this would represent selling of roughly $16 billion, hardly enough to move the needle on a $17 trillion market.  En masse, though, with similar moves by other money managers and sovereign investment funds, yields are quickly heading higher. It's unlikely that pension funds and endowments are forming much of the selling, with asset allocation models proscribing certain levels of fixed income allocation. The Fed, while off its campaign of gobbling up a substantial share of new UST issuance, is clearly not a seller either and, in fact, continues to buy each month to replace maturing UST holdings.

Many look to China and Japan, as the largest holders of US Treasury bonds and question their level of buying and selling. The largest holder of US Treasury obligations, however, is actually the Social Security Trust Fund, with roughly $2.8 trillion held (albeit of a special class). Thus, just to meet the targeted date of insolvency of Social Security of 2033, the US Treasury must first raise $2.8 trillion from taxpayers in order to meet the obligation of maturing UST securities. But that's another story.

What's interesting about the recent rise in interest rates is what's happened to the relative value of US Treasury bonds and the sovereign debt of other developed economies. With the UST 10-year trading near 2.50%, its yield represents a whopping 150 basis points over the German BUND, now also rising rapidly in yield. Moreover, UST is trading at higher yields than all EU nations and Japan, save the exception of Portugal, whose bonds yield only slightly higher.

All of this activity, occurs following the first limited bond buying by the ECB begun last March, as part of a 19-month effort to inject $1.2 trillion into the European economy. It's hard to imagine how that plan won't drive yields far lower in months ahead, including those of US Treasuries, now at historic wide spreads to European debt. But in a world where economies are administered by central banks, rather than market based, anomalies like this latest tantrum can and may continue.

Tuesday, June 9, 2015

NJ Supreme Court Rules on Public Pension Funding

In a surprise move of the New Jersey Supreme Court this morning, the court overruled a lower court decision that required Governor Chris Christie to fully fund deposits to the state pension funds, previously cut by the Governor in his annual budget. Last year, the Governor cut $1.5 billion in funding for pensions from his proposed budget, causing state labor unions to sue for restitution. The unions argued that the Governor was compelled to provide the funding as part of a negotiated settlement with the unions in 2011.

Today's decision reverses the lower court action, with the State Supreme Court ruling that the Debt Limitation Clause of the State Constitution does not recognize or support a multi-year binding commitment to fund public employee pensions, as so argued by the unions and upheld by the lower court. While this ruling may give the state some interim budget relief, it's pension funding obligations remain daunting.

In 2014, the State provided just under $700 million in cash contributions to its employee pension fund. An additional $2.8 billion was spent on employee health care benefits. The total of roughly $3.5 billion represents more than 10% of state budgeted expenses for the year. Despite this significant investment in shoring up its benefit plans, the state will still underfund its statutory annual funding obligations by nearly $3 billion.

To fully fund its requirement, just to keep pace with current accrued pension costs - and with no effort to catch up on prior underfunding - would require $6.5 billion. The state now faces a $90 billion shortfall in its employee benefits funding - $37 billion in pension costs and $53 billion in unfunded health benefits - three times the size of the state budget.

Friday, June 5, 2015

New GAO Study on Underfunded Retirement Savings

The Government Accounting Office just released a new report on retirement security. Their conclusion: most households approaching retirement have very low savings. Just how low, though, is startling. Among households age 55 and older, one-half have no retirement savings at all in 401(K), IRA or similar defined contribution accounts. Similar findings were reported in a 2013 study of the Federal Reserve Bank, along with the fact that for those age 55 and older that do have retirement accounts, the median balance was just $111,000.

The GAO study, however, also found that 29% of respondents had neither funded retirement accounts nor any employer-sponsored defined benefit plan coverage. Of this group, 41% do not own a home, while an additional 24% own a home with some level of mortgage indebtedness outstanding. For this population, social security, with a median benefit of $15,000 per year, may provide their only means of support in the years ahead. The US Census Bureau estimates that there are currently 40 million Americans aged 65 and older, with this population growing by 10,000 each day. By 2030, an estimated 65 million Americans will have reached retirement age. If 29% are projected to live on a median Social Security income of $15,000 per year (and with Social Security by the Social Security Administration's own projections to become insolvent by 2033) America may soon look like a very different place.

As you might have guessed, the data is no better for younger generations. According to a Harris Poll in 2011, an amazing 32% of the members of Generation X, aged 34-45, reported no personal savings whatsoever. In a recent report of Allianz, 84% of Gen X reports that they see traditional retirement as a romantic fantasy of the past (see post below).

What was most interesting about the GAO report was the distribution of retirement savings among households 55-64. While 41% reported no savings and 20% with savings of less than $50,000, it was the distribution of retirement savings of higher level savers that showed some intriguing patterns. While 9% of the group surveyed showed total savings between $250,000 - $500,000, an additional 9% or an equal number as in the prior group, showed total savings of greater than $500,000. Unfortunately, it's only this latter group, or 9% of those surveyed, that will have much chance of funding a comfortable retirement through 401(k), IRA and similar defined contribution savings plans. The full chart is provided below.