The last few years have changed the landscape of personal finance. On the one hand, investing has become more accessible than ever, side hustles have become more viable, and homeownership less exclusive. On the other hand, the wealth gap has widened, and the COVID-19 pandemic has caused financial stress for many people. We thought this would be a good time to take stock of where we are as a country with retirement, so we read through a number of studies from the last 3 years and compiled a list of 20 stats that stood out to us.
Retirement Awareness
The first thing we looked at was retirement awareness. Do people know how much they need to have saved to retire comfortably? If not, do they know how to figure that out? Here’s what we found:
1. 75% of Americans think they can retire well with less than $1,000,000 in retirement savings. (AAG 2021)
2. 56% of Americans don’t know how much they need to retire comfortably (NWM 2019)
3. 72% of Americans agree that the average retiree does not know enough about investing to make their savings last through retirement (NIRS 2021)
4. 4 in 10 workers don’t know who to go to for financial and retirement planning advice. (EBRI 2021)
- 35% of workers say they would seek non-professional advice from friends and family
- 35% said they would go online to do their own research
Retirement Savings
The next thing we looked at was retirement savings; how much most people have saved for retirement as well as the process of saving. Here’s what we found:
5. More than 1 in 5 non-retired U.S. adults (22%) have less than $5000 in total retirement savings (NWM 2019)
- 15% of non-retired U.S. adults have no retirement savings whatsoever. (NWM 2019)
6. 68% of Americans agree that the average worker cannot save enough on their own to achieve retirement security (NIRS 2021)
7. 1 in 3 workers report that the COVID-19 pandemic has negatively impacted their ability to save for retirement. (EBRI 2021)
8. 70% of Americans agree that employers should contribute more to their employees’ retirement savings (NIRS 2021)
9. In 2021, 72% of workers say they are confident they will have enough money to live comfortably throughout their retirement years, up from 54% in 2009. (EBRI 2021)
Retirement Outlook
Next, we looked at Americans’ retirement outlook. How do people feel about their future? Are they confident in their future or are they worried?
10. 58% of Americans say that it is getting harder to prepare for retirement. The top contributing factors listed by people who are struggling to prepare for retirement are:
- The rising cost of healthcare in retirement (59%)
- The rising cost of long-term care (56%)
- People are living longer (53%)
- Fewer people have pension benefits through their employer (51%)
- Middle-class workers’ salaries are not increasing (51%)
- Increasing debt such as student loans, housing, or credit cards (47%)
- Workers are now expected to fund and manage retirement savings themselves (45%)
- The stock market is more volatile (33%)
- Source: NIRS 2021
11. 46% of Americans expect to work past the traditional retirement age of 65 (NWM 2019)
12. Of the 46% of Americans who expect to work past 65, half (53%) say it will be by choice. (NWM 2019) Here are some reasons they gave:
- “I enjoy my job/career and would like to continue” (58%)
- “I want additional disposable income” (46%)
- “It is a social outlet that will help me stay active/prevent boredom” (39%)
13. 56% of Americans are concerned about achieving financial security in retirement (NIRS 2021)
14. 67% of Americans agree the US is facing a retirement crisis. This sentiment is consistent across party lines. (NIRS 2021)
15. 51% of Americans said that the COVID-19 pandemic has increased concerns about their ability to achieve financial security in retirement. (NIRS 2021)
Retirement Planning
Last, but not least, we looked at retirement planning. Are Americans planning for retirement? Do they know how? Here’s what we found on this front:
16. When asked how they planned to ensure retirement security, these are the steps that respondents said they would take:
- Stay in current job as long as possible (60%)
- Cut back current spending (55%)
- Cut back spending once retired (48%)
- Save 1-4% more than now (48%)
- Delay taking Social Security in order to get a higher benefit (41%)
- Save 5%+ more than now (40%)
- Seek full or part-time work in retirement (39%)
- Source: (NIRS 2021)
17. 9 in 10 workers expect some income from social security in retirement. (EBRI 2021) However, Northwestern Mutual reports that more than a fifth (22%) of non-retired U.S. adults believe it is not at all likely that Social Security will be available when they retire. (NWM 2019)
18. 83% of workers believe their workplace defined contribution plan will be a major or minor source of income in retirement (EBRI 2021)
- Only 46% of retirees can say the same (EBRI 2021)
19. 33% of Americans say they do not have access to workplace retirement benefits (BLS 2021)
- Note: this number is much higher with part-time and low-wage workers, at 61% and 68% respectively.
20. 21% of pre-retirees say they will never plan for retirement, with 63% saying they wouldn’t be able to afford a planner. (RISE 2021)
Conclusion
As you can see, we have a long way to go as a country with retirement. Many of the stats listed above are consistent with our findings among Savology users. It’s not all bad, though. For everything that’s made retirement more confusing and out of reach, there are many things that have made it more convenient and attainable than ever before. One thing that makes retirement easier to grasp is a financial plan. The financial plans of the past were clunky, expensive, and quickly became out of date. With a digital financial plan through Savology, you will not only see where you currently stand with your retirement preparation. You will also get personalized recommendations and action items to help you reach your goals. And the best part is that as you update elements of your profile like your income, monthly savings, or other areas, your plan will refresh to match.
