Retirement Savings Shortfall in US Will Cost $1.3 Trillion

America’s retirement crisis could cost federal and state governments an estimated $1.3 trillion by 2040, according to a new analysis.

Inadequate retirement savings will result in higher public assistance costs, decreased tax revenue, lower household spending and a decline in standards of living, according to a report done for the Pew Charitable Trusts.

The anticipated costs — $964 billion for the federal government and $334 billion for states between 2021 and 2040 — are “relatively shocking,” John Scott, director of Pew’s retirement savings project, said during a presentation on Thursday.

The shortfall is being driven in part by demographics, with the share of households including someone 65 or older ...