Groundbreaking research from a collaboration of the Employee Benefit Research Institute and J.P. Morgan Asset Management is the first to use a unique set of data on actual spending and savings behavior to provide a holistic financial view of U.S. households.  In this inaugural report, the first in a series, we focus on retirement savings. Why do some people save more than others, even when they have equivalent income?

Despite having similar salaries, the middle 50% of our research population save about 3% more of their salary at all ages than the bottom 25% of savers. For the first time, we can point to specific categories of spending that are constraining the ability to save more. Low savers generally spend more as a percent of salary on housing, transportation and food and beverage, and less on travel.

We hope our important new research will be useful for policymakers, plan sponsors and plan providers as they look to facilitate better retirement outcomes.

Despite having similar salaries, middle savers save about 3% more of their salary at all ages than lower savers, and end up with meaningfully higher 401(k) account balances

Median contribution rate as a percent of salary

Source: 2016 anonymized EBRI, EBRI/ICI Participant-Directed Retirement Plan Data Collection and JPMorgan Chase data. A population of 22 million Chase households and 27 million 401(k) plan participant records were isolated to identify an overlapping population of 1.4 million households. Households with employer plan balances of $100 or less, total spending less than 50% of salary or likelihood of more than one earner were removed to ensure a complete picture of saving/spending.

Disclosures

This research paper was produced through a collaboration between J.P. Morgan Asset Management and the Employee Benefit Research Institute (EBRI), a Washington, D.C.-based organization committed exclusively to public policy research and education on economic security and employee benefit issues.

In an ongoing collaborative effort, the Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI) maintain the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project, which is the largest, most representative repository of information about individual 401(k) plan participant accounts. ICI is the leading association representing regulated funds globally, including mutual funds, exchange-traded funds (ETFs), closed-end funds, and unit investment trusts (UITs) in the United States, and similar funds offered to investors in jurisdictions worldwide. While this paper uses data from the EBRI/ICI database, ICI did not participate in the research collaboration between EBRI and J.P. Morgan Asset Management and was not involved in the writing of this paper.

EBRI is not affiliated with JPMorgan Chase & Co. or any of its affiliates or subsidiaries.

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