These 100 CEOs have more retirement savings than 41% of American households combined

The 100 American CEOs with the biggest company retirement funds have $4.7 billion in those accounts — which is roughly equivalent to the retirement savings of the bottom 116 million Americans, or 41 percent of the country’s families.

This data comes from the Institute for Policy Studies, which released a new report looking at the widening gap in retirement savings between the wealthiest Americans and everyone else.

It shows that CEOs have, thanks to preferential tax policies, amassed a huge amount of retirement wealth. But the story is quite different for less-wealthy people. The median American actually saw the funds in her retirement account decline since the recession.

And this inequality could get worse under a Trump administration: The President-elect’s tax policies, if enacted, would allow chief executives to accrue even more tax-free wealth, all at the cost of American taxpayers.

It’s hard to understand exactly how large the imbalance in retirement savings is right now. So graphics editor Javier Zarracina and I tried to illustrate exactly what this gap looks like.

This imbalance is part of a larger trend of the growing gap between the retirement accounts of wealthy Americans and everyone else. In fact, more than one in three Americans have nothing saved for retirement.

One reasons for this is the decrease in worker unions, which help middle-class Americans accrue wealth for retirement. But in the 1980s, Ronald Reagan drastically reduced the power of unions — and now, far fewer people are a part of unions and their power has shrunk.

It’s led to the demise of pension plans that promise a guaranteed income after retirement. Pension plans put the financial risk on employers, but now they’ve been replaced with 401k accounts, which leaves workers less certain about their futures.

Another reason it’s been harder for workers to save for retirement has to do with how CEOs get paid. Because of a tax loophole, company leaders often get paid in large bonuses that can be bigger than their actual salaries. That means they are financially incentivized to create short-term gains for their companies (and presumably get a larger bonus). The lead author of the report, Sarah Anderson, points out this is sometimes accomplished by cutting worker benefits.

“It encourages a whole host of short-termist kinds of actions,” she said.

Anderson also makes the point that CEOs have tools that help them save better than the rest of us.

For example, there are limits on how much money we can put into a 401k plan. But most large companies set up special retirement accounts for their executive, which let them defer their compensation until retirement — with no contribution limits. And they don’t have to pay taxes on this income until they withdraw the funds.

When CEOs withdraw their money from these unlimited retirement accounts, they have to pay taxes on that income. Currently, the top marginal rate is 39 percent. Trump wants to lower that to 33 percent.

Right now, the top 100 CEOs have about $3 billion in those special accounts. So under current law, they would owe $1.2 billion in federal income taxes if they withdrew it. Under Trump’s plan, that number drops to $979 million, which is a savings of almost $200 million. That’s money taxpayers lose out on.

This is all part of a larger problem. The wealth gap in the US is already problematic, and getting worse. Federal minimum wage has been dropping, labor unions are on the decline, and the value of high school and college diplomas are not what they used to be. That means fewer Americans will have savings when they retire — and they’ll have to rely solely on Social Security.

Trump hasn’t expressed any plans to mess with Social Security, but House Republicans recently unveiled a plan that cuts benefits for everyone but the lowest-earning Americans — and raises the retirement age. Republicans call this a plan to save Social Security, but as the LA Times columnist Michael Hiltzik writes:

It “fixes” Social Security in the same sense that one “fixes” a cat, and makes the program less relevant for millions of Americans facing retirement with ever shrinking resources.

In short, widening wealth inequality means Americans will need a stronger safety net than their parents. But instead, they’ll get to retirement and find a less potent one.

Anderson said, “The one thing that’s really between them and abject poverty in their senior years is being attacked.”