$400 Trillion Shortfall

Katherine Chiglinsky of Bloomberg reported this week that longer life spans and disappointing investment returns will lead to a $400 trillion retirement-savings shortfall in about three decades, a figure more than five times the size of the global economy, according to a World Economic Forum report.

A shortfall could be reached by 2050, the World Economic Forum said. The $400 trillion figure is derived from the amount of money governments, employers and individuals would need to provide each person with a retirement income equal to 70 percent of his or her annual earnings before leaving the workforce.

Employers have been shifting away from pensions and offering defined-contribution plans, a category that includes 401(k)s and individual retirement accounts and makes up more than 50 percent of global retirement assets. That heaps more risk onto individuals, who often face a lack of access to the right options as well as the resources to understand them, Chiglinsky writes in her article World’s Major Economies to Come up $400 Trillion Short on Retirement Savings. Stock and bond returns that have trailed historic averages in the past decade have also contributed to the gap.