Despite recent academic studies suggesting the vast majority of Americans will have adequate retirement income, BGI officials found a broad swath of American employees face significant cuts in their expected retirement income once adjustments for health care and the value of home equity are made.

“One-half of all middle-class Americans will have one-quarter less in retirement than they realize,” Matthew H. Scanlan, BGI managing director and head of Americas institutional business, said at a news briefing Tuesday, April 29.

The study’s authors assumed that Medicare—with an estimated $68.5 trillion current account deficit—would become means-tested. For the top half of households based on wealth, that would result in a $7,000-a-year cost for buying private health insurance based on current prices.

In addition, only 40 percent to 50 percent of home equity will be available for non-housing consumption in retirement, they assumed. Other studies include all home equity in calculating available retirement assets, they said.

Potential government solutions are to raise Social Security taxes and cut benefits, shift risks to the individual and nationalize health care. All face political obstacles.

Employer solutions include trying to preserve defined-benefit plans, improving participation and contribution rates for defined-contribution plans, and making defined-contribution plans more like defined-benefit plans through better plan design and use of tailored target-date funds.

Filed by Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.