Most Americans Aren't Near $1M in Retirement Savings — Why That’s Risky for Many
Many Americans worry they won't have enough money to last through retirement. A recent report from the Transamerica Center for Retirement Studies found that for 36% of Americans, their top retirement fear is outliving their savings and investments, and 62% agree that they could work until retirement and still not save enough to meet their needs, or, if already retired, that they were unable to save enough.
That anxiety reflects a real gap. The report found that among nonretired Americans, only 8% have $1 million or more in retirement savings, while the median savings is $56,000. For many workers, that shortfall could mean delaying retirement, cutting back on spending or relying more heavily on fixed income sources later in life.
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Here's why these numbers matter — and what they could mean for your retirement outlook.
$56,000 Can Be a Strong Start — or a Serious Shortfall
The data reflect Americans across all age groups, but the implications vary widely depending on where someone is in their career.
"For Generation Z workers, $56,000 can represent a strong start that can grow and compound for decades before retirement," said Catherine Collinson, founding CEO and president of the Transamerica Institute. "For a baby boomer approaching or entering retirement, that same amount would likely need to last 20 to 25 years or more.
“What’s concerning is that many people nearing retirement are at risk of falling short of what they may need,” she said, adding that this could leave little room for unexpected job loss, major expenses or longer life spans.
For older Americans, especially, lower balances can limit their flexibility and their ability to retire securely.
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How To Estimate Your Retirement Number
While $56,000 may fall far short for someone nearing retirement, the right savings goal will look different for each person.
"This is very personal, based on your age, the number of years until you retire, expected sources of retirement income and estimated living expenses in retirement," Collinson said. "The best approach is to estimate your savings needs by using a retirement calculator, asking your employer’s retirement plan provider or consulting with a financial advisor."
As a starting point, experts generally suggest accounting for your expected lifestyle, healthcare costs and how long your savings will need to last — all of which can vary significantly from one household to another.
Why More Americans Plan To Rely on Social Security Than on Savings
The report found that more Americans plan to rely on Social Security (32%) than retirement savings (26%) as their primary source of income in retirement. This could create additional financial pressure for those further away from retirement.
"Many Americans are expecting to primarily rely on Social Security because they have not saved enough, or feel that they are unable to save enough, to rely on self-funded savings," Collinson said. "Social Security continues to be the cornerstone of retirement income, and workers contribute to it with a portion of every paycheck."
However, depending too heavily on those benefits may carry some uncertainty.
"The reality is that Social Security is undergoing strain, and it is likely that Congress will implement reforms in the coming years that could negatively affect a person’s benefits," Collinson said. "At this point, it’s unclear how the program may change, so we need to build financial plans and be ready to adjust them accordingly."
While $1 million is often cited as a retirement benchmark, relatively few Americans have reached it — and the median savings balance suggests many may need to adjust their expectations or plans. The earlier you understand where you stand, the more options you may have to close the gap.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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