The number of American citizens with retirement savings: A revelation that might catch you off guard.
In a recent Gallup poll, it was found that a significant number of Americans lack a retirement savings plan [1]. This is concerning as retirees typically need 70% to 80% of their former income to maintain their standard of living and do the things they've always wanted to do [2].
Social Security benefits for an average earner are expected to replace about 40% of their wages, assuming the program doesn't have to make cuts [3]. This means that without adequate savings, many retirees face financial insecurity, potentially needing to keep working indefinitely or cutting back drastically on expenses.
Financial security in retirement is crucial. Less than half of retired Americans feel they have saved enough, and many report expenses exceeding their income in retirement [2][3]. A retirement savings plan can help manage expected and unexpected costs, such as inflation, healthcare, and housing repairs.
A solid plan also protects against market risks. Market downturns and economic uncertainty can deplete retirement accounts, especially for those close to retirement who lack automatic investment adjustments (like target date funds) [1]. A well-funded retirement plan can include diversification and emergency savings to mitigate this risk.
Inflation and healthcare costs are major concerns for retirees, with 92% and 85% respectively expressing worry in 2025 [2]. A well-funded retirement plan can help maintain living standards despite these pressures.
Without a retirement savings plan, many Americans face financial fragility. A 2025 survey found that 31% reported having zero savings [3]. This leads to difficulty covering unexpected expenses and increases the risk of poverty in old age.
The lack of savings can also force retirees to delay medical care, rely solely on government benefits, or work throughout their lives rather than risk running out of money in retirement [3].
It's important for individuals to save for retirement steadily throughout their career. Starting early can significantly increase the size of the nest egg. For example, starting to fund a retirement plan midway through your career is not too late to make a difference in your retirement savings. If you start saving $300 a month for retirement at age 45 with a 8% yearly return, you could accumulate approximately $165,000 by age 65 [4].
It's important to assess your budget, determine what you can afford to contribute, and start putting that money towards retirement savings as soon as possible. Different accounts can be used to save for retirement, including IRAs and 401(k) plans. Some Americans may be saving for their senior years in a taxable brokerage account or a traditional savings account, even if they don't have a retirement plan.
In summary, having a retirement savings plan is crucial to provide financial resilience, safeguard against economic uncertainties, and ensure a dignified standard of living after leaving the workforce. Without one, Americans are vulnerable to financial hardship and may face the prospect of delayed retirement or lower quality of life [1][2][3][4].
References:
[1] Gallup. (2021). More Americans Without Retirement Savings Than Ever Before. https://news.gallup.com/poll/355941/americans-retirement-savings.aspx
[2] Employee Benefit Research Institute. (2021). 2021 Retirement Confidence Survey. https://www.ebri.org/docs/default-source/rcs/2021/2021_rcs_report.pdf
[3] AARP. (2021). AARP’s 2021 Financial Security Survey. https://www.aarp.org/content/dam/aarp/ppi/2021/10/2021-aarp-financial-security-survey-report.pdf
[4] Investopedia. (2021). How Much Should I Save for Retirement? https://www.investopedia.com/terms/h/howmuchtosaveforretirement.asp
- To secure a comfortable retirement, it's essential for individuals to invest in personal-finance strategies, such as creating a retirement savings plan, which can help manage expected and unexpected costs like inflation and healthcare.
- Without a well-funded retirement savings plan, many Americans may face financial insecurity during their golden years, potentially leading to decreased living standards, delayed retirement, or the need to keep working indefinitely.
