The Aspen Institute

This brief explores the interaction between two critical financial security challenges, income volatility and lack of retirement preparedness. An emerging body of research indicates that large numbers of American households experience major fluctuations in their incomes, which can limit their ability to cope with financial challenges. Yet little is known about the extent to which income volatility during working years impacts retirement security. This paper summarizes the current literature on the nature of income volatility and the retirement savings crisis, explains what we know about how they interact, and closes by identifying important gaps in our knowledge. Our analysis builds on the work of two Financial Security Program projects, the Expanding Prosperity Impact Collaborative (EPIC), which spent two years studying income volatility, and the Retirement Savings Initiative (RSI), which is dedicated to enabling low- and moderate-income Americans to save more for retirement.