The Good, The Bad, and The Ugly Truth of Retirement Savings

Retirement: The Bad News

 28% of people have no money saved at all for retirement, according to a 2024 survey by GoBanking Rates, and only 10% of Americans between the ages of 62 and 70 are both retired and financially stable.

The survey revealed that 25% of people think they can retire with less than $500,000, with another quarter thinking it’ll take between $500,000 and $1 million. Only 10% reported having $50,000 to $100,000, and 33% had less than $50,000.  

In general, Americans find it difficult to save for retirement. Blame it on overspending, education costs, or the minimum wage being stuck at $7.25 an hour since 2009. Americans are working well into their 80s, and that’s not necessarily because of a deep affection for their professions. 

Age Matters in Retirement

The Economic Policy Institute defines working-age families as those households whose income-earners are between 32 and 61 years old and notes that the median retirement savings for these families amounts to just $5,000. However, retirement preparedness varies by age:

Millennials

USA TODAY reports that millennials have an average of $62,600 saved for retirement, a wide gap between the $1.65 million they believe they will need to retire comfortably. 

Douglas Boneparth, a certified financial planner, says, “In practice, a lot of us are putting retirement down the goal priority list in favor of paying off student debt or buying homes. Many are not overspending or living a frivolous lifestyle yet still can’t afford to put money toward all their competing priorities.”

Generation X

Despite being closer to retirement than millennials, Generation X still feels like they aren’t close to retirement, according to a report by Bankrate. In that report, 69% of Gen Xers noted they felt behind on where they should be for retirement. One out of three Gen Xers said they planned to keep working part-time after they retire. Coincidentally, Gen Xers also have the highest credit card debt of any generation, with over $9,000 per person on average, according to the NY Society Of CPAs.

Baby Boomers

According to a CBS News report, 25% of younger boomers have nothing saved for retirement. For those who do have savings, the average balance hovers around $250,000. This may sound reasonable for a retirement nest egg, but it boils down to about $11,900 per year of expected retirement — significantly lower than recommended.

Retirement: The Good News

In the past few years, there have been efforts by the federal government to make saving for retirement easier for more Americans, including the SECURE 2.0 Act and the Retirement Savings for Americans Act.

SECURE 2.0

In 2022, Congress passed the SECURE 2.0 Act into law. The act contains several important provisions aimed at making participation in a retirement savings plan accessible for more Americans and increasing the likelihood of a successful retirement savings strategy, including automatic enrollment and increasing limits on 401(k) catch-up contributions for those 50 and older.

Retirement Savings For Americans Act

In 2023, US House Representatives Lloyd Smucker and Terri Sewell, together with US Senators John Hickenlooper and Thom Tillis, reintroduced the Retirement Savings for Americans Act.  Among the bill’s key provisions are (1) expanding access to retirement savings plans to those who do not have access to one sponsored by their employer, including ‘gig workers,’  and (2) establishing an automatic 1%  federal contribution for low- and moderate-income workers. The bill is still making its way through Congress but has received endorsements from the Economic Innovation Group (EIG),  the American Association of Retired Persons (AARP), the US Conference of Mayors, and  Chuck Schwab.

Even though the average retirement age has risen over the past two decades and economic conditions make saving for retirement difficult for many Americans, efforts like SECURE 2.0 and the Retirement Savings For Americans Act, should it be passed into law, will make saving more accessible, and hopefully, more successful for more Americans. Ultimately, though, it will take a combination of legislation, improving economic conditions, and personal accountability. 

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[Editors’ Note: To learn more about this and related topics, you may want to attend the following on-demand webinars (which you can view at your leisure, and each includes a comprehensive customer PowerPoint about the topic):

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This is an updated version of an article originally published on June 7, 2019 and updated January 18, 2023.]

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