Millions of Americans are terrified they won’t have enough money to retire — but a leading expert has some good news.

Some 89 percent of Americans worry the country is in the grips of a ‘retirement crisis,’ according to a 2023 survey by the American Advisors Group.

Some argue that the established system of 401(K)s and individual retirement accounts (IRAs) layered on top of Social Security is an abject failure in desperate need of a reboot.

But Andrew G. Biggs says the opposite is true — and that almost everything Americans think they know about retirement is wrong.

Biggs, a senior fellow at the American Enterprise Institute and former official at the White House and Social Security Administration, told the Daily Mail that retirees today are far better off than most people assume.

‘By almost any standard, retirees today are doing well. They are doing much better than they did in the past,’ he told the Daily Mail.

Look at savings, income levels or poverty rates among retirees, he argues — the numbers simply don’t support the doom-and-gloom narrative.

‘It is understandable that people are worried, but research has found that most people are pleasantly surprised when they get to retirement to find out that their financial security is better than they thought it was going to be,’ he said.

Biggs argues that there is a gap between what Americans forecast will happen in retirement versus the reality when they actually get there.

When surveys ask actual retirees how they are doing, they give a completely different picture on it compared to younger Americans looking ahead, he said.

Survey data from Vanguard show that less than 5 percent of retirees consider their own financial situation to be a ‘retirement crisis.’ Gallup finds that 4 in 5 seniors say they have enough money, not just to survive, but to ‘live comfortably.’

‘While majorities think the country faces a retirement crisis, almost no retirees describe their own financial situation in those terms,’ he said.

Americans are also working longer, giving people more time to build retirement savings and fewer years of retirement those savings must cover.

The typical American leaves the labor force three years later today than they did in the mid-1990s, according to the Bureau of Labor Statistics.

The average age at which Americans claim Social Security has also increased by 1.8 years since the 1990s.

‘Since each year you delay raises your benefits by a bit under 7 percent, this means about 12 percent higher benefits once people do retire,’ said Biggs.

Because more Americans are covered by 401(K)s, and because both employer and employee pay into them, the amount we save for retirement each year has increased, said Biggs.

In 1975, according to the US Department of Labor, total contributions to private sector retirement plans were equal to 5.8 percent of total employee wages.

By 2022, total retirement plan contributions increased to 9 percent of total wages. That is a 55 percent increase in the amounts Americans are saving for retirement each year.

As a result, total retirement plan assets are at record levels.

‘Total assets in all retirement plans, including traditional pensions, IRAs and 401(K)s are fives times higher today than in 1975 during the supposed golden age of traditional pensions,’ Biggs said.

Retiree incomes have also grown significantly since the late 1970s, according to data from the Congressional Budget Office, and the share of retirement households living below the poverty threshold has also fallen significantly.

In 1979, the average household aged over 65 had an income of $45,100 (measured in today’s dollars), but by 2021, the average retiree household’s income had more than doubled to $116,700.

‘The Census Bureau found that poverty drops from the few year before retirement to a few years after, which is the opposite of what you’d expect if Americans weren’t saving enough,’ Biggs added.

He also argues that Social Security benefits in the US are generous compared to other countries such as Canada and the UK.

‘If you are a middle wage two earner couple retiring today, you get almost $50,000 a year in Social Security benefits. The typical couple get two and a half times the poverty threshold before they touch a penny of their own savings.

‘And if you’re a high income couple you can get close to $100,000 a year from Social Security.’

But according to the latest forecast from the nonpartisan Committee for a Responsible Federal Budget (CRFB), Social Security’s retirement fund is set to run short in just seven years — which could end up slashing benefits for millions of Americans by thousands of dollars a year.

This means retirees could face automatic 24 percent benefit cuts as early as the end of 2032.

The Trump administration has proposed various changes to the Social Security program, including cutting taxes on the benefits for certain retirees, but experts warn this could come at a price for the dwindling finances of the program.

For Biggs, the solution is simple.

‘Gradually reduce benefits for middle income retirees, and, in particular, high income retirees. There is simply no public purpose in which a high income couple can get $100,000 a year from Social Security when, if they were living in Canada with the same income, they would get less than $30,000 a year,’ he said.

‘We’re simply unnecessarily paying too much at the top end.’

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