If you’re concerned about a retirement crisis in the United States, you’re not alone. A recent survey found that 79% of working-age Americans share the same worry, up from 67% in 2020. Even more concerning, over half of Americans (55%) are unsure about their financial security in retirement.1
The inflation we’ve experienced in recent years has deeply affected how Americans view their retirement prospects. According to the same survey, 73% of respondents said recent inflation has made them more anxious about their future.1
Generation X Is Falling Behind
For many, retirement insecurity isn't just a perception—it’s a harsh reality. Middle-class workers, in particular, seem to struggle to save enough. The National Retirement Risk Index reveals that half of U.S. households are not expected to maintain their standard of living once they retire at age 65.2
Generation X, born between 1965 and 1980, is on the cusp of retirement, with the first wave turning 60 in 2025. Unlike the Baby Boomers before them, Gen X entered the workforce after the shift to company-sponsored retirement plans. While the average Gen X household has accumulated over $243,000 for retirement, the median household has only $40,000 saved.2
Moreover, nearly half of private sector employees—about 57 million Americans—don’t have access to workplace retirement savings plans. Without the benefit of automatic payroll deductions, many households find their retirement options limited.2
Most Americans (87%) believe that leaders in Washington don’t understand how challenging it is to save for retirement, a significant increase from 76% in 2020. There’s also strong support (87%) for Congress to act now to secure Social Security funding rather than postponing a solution.1
What’s Being Done
In recent years, Congress has passed the SECURE and SECURE 2.0 Acts to address the retirement crisis. The SECURE Act of 2019, the most significant retirement legislation in over a decade, introduced critical changes to help investors better prepare for retirement. It raised the Required Minimum Distribution (RMD) age and allowed first-time parents to withdraw from their retirement accounts without penalties.3
Building on the success of the SECURE Act, Congress passed SECURE 2.0 at the end of 2022. This legislation brought new RMD dates, higher catch-up contributions, and other enhancements.3
While these provisions are a step in the right direction, they don’t reverse time. If you’re concerned about your retirement, it’s crucial to develop a strategy that aligns with your goals, time horizon, and risk tolerance.
Taking Control
An experienced investment adviser can help you prepare for retirement and give you a clear picture of what retirement could look like 20 or 30 years after you stop working.
Working toward a specific retirement goal can be motivating, especially if retirement is still some years away. Fidelity Investments offers a simplified model to help you gauge your retirement readiness. According to Fidelity, you should aim to have saved:4
1x your salary by age 30
3x your salary by age 40
6x your salary by age 50
8x your salary by age 60
10x your salary by age 67 (full Social Security retirement age)
These are general estimates, but they provide a helpful starting point for building a strategy and tracking progress. If your children, grandchildren, or friends are worried about their ability to retire, you can use these guidelines to help them assess their situation and to better plan for their future.
Don’t Ignore Social Security
Despite concerns about the program’s future, Social Security is expected to remain a crucial part of retirement income. When planning your retirement, be sure to consider the role Social Security can play in your overall strategy.
In 2024, the maximum Social Security benefit ranges from $2,710 to $4,873 per month, depending on your retirement age. You can begin claiming benefits as early as age 62, but by waiting until your full retirement age, you’ll receive 100% of your monthly benefits. There’s no one-size-fits-all answer on when to start drawing benefits, as everyone’s situation is unique. However, don’t overlook Social Security as you craft your retirement strategy.5
Closing the Gap
If the retirement crisis feels too close for comfort, there are steps you can take now to bolster your future financial security. Consider the following:
Work longer—delaying retirement by even a few years can make a significant difference.
Evaluate the pros and cons of claiming Social Security benefits closer to full retirement age.
Increase your retirement savings.
Ensure your investments are working effectively for you.
If you’re 50 or older, consider making catch-up contributions to your retirement accounts.
Professional Help
If you’re worried about whether you’ll be able to live the retirement you’ve envisioned, find an experienced investment adviser. One who works with individuals and families to create personalized retirement strategies tailored to their unique needs. It's overwhelming to navigate this alone.
Sources:
National Institute on Retirement Security, February 2024, at https://www.nirsonline.org/reports/retirementinsecurity2024/.
Forbes.com, April 11, 2024 at https://www.forbes.com/sites/dandoonan/2024/04/11/americans-are-worried-about-retirement-savings-and-they-should-be/?sh=7ff6da22a065.
Fidelity.com, November 20, 2023 at https://www.fidelity.com/learning-center/personal-finance/secure-act-.2#:~:text=Starting%20in%202024%2C%20RMDs%20will%20no%20longer%20be,emergency%20savings%20account%20associated%20with%20a%20Roth%20account.
Fidelity.com, February 14, 2024 at https://www.fidelity.com/viewpoints/retirement/how-much-do-i-need-to-retire.
SSA.gov, February 2024 at https://faq.ssa.gov/en-US/Topic/article/KA-01897#:~:text=The%20maximum%20benefit%20depends%20on,maximum%20benefit%20would%20be%20%244%2C873.
The information contained on this site may not reflect current developments; does not constitute investment, tax, or legal advice; and should not be relied upon for such purposes. There is no guarantee that any forecasts made will come to pass. We make no representation about the accuracy of the information or its appropriateness for any given situation. This information is not an offering. Past performance does not guarantee future results.
Comments