The No. 1 Factor Derailing Retirement Timelines, According to Workers
Rising living costs are making it harder for many Americans to retire on their own timelines.
According to a recent MyPerfectResume survey, 64% of workers said the cost of living is preventing them from retiring as early as they would like. At the same time, 35% expect to retire later than they did three years ago, and 55% now anticipate working until at least age 65.
Consider This: 3 Retirement Rules That No Longer Apply Like They Did for Your Parents
Keep Learning: How Middle-Class Earners Are Quietly Becoming Millionaires — and How You Can, Too
Here's why higher living costs are delaying retirement plans for so many Americans and what workers can do to improve their outlooks.
Why Rising Living Costs Are Delaying Retirement
Many workers dream of retiring early through disciplined saving and investing, but they increasingly see that goal as out of reach: The survey found 44% of respondents believe early retirement sounds appealing but is unrealistic for most people. Meanwhile, 51% said they are either behind on retirement savings or have not started saving at all.
"According to MyPerfectResume's report, 64% of workers [said] the cost of living is preventing them from retiring as early as they would like," said Dr. Jasmine Escalera, career expert at MyPerfectResume. "That finding makes sense when we look at what has happened to workers’ purchasing power over the past several years."
A separate MyPerfectResume report found that while average pay increased by 18% between 2020 and 2024, the typical U.S. worker actually earned about 2.6% less in real terms after inflation and rising living expenses were taken into account.
"Even if someone is earning more today than they were a few years ago, that doesn’t necessarily mean they have more money available to put toward retirement," Escalera said. "When more of your paycheck is going toward everyday expenses, it can become much harder to consistently put money away for the future. And over time, that can have a real impact on when retirement feels financially possible."
Housing and Healthcare Costs Are Squeezing Retirement Savings
While overall cost of living was the most frequently cited obstacle to retiring earlier, workers identified specific expenses that are putting the greatest strain on their finances. Healthcare costs were cited by 31% of respondents, while 30% pointed to housing costs.
"Housing and healthcare are two expenses that can take up a significant portion of a worker's income, and when those costs rise, there may simply be less money available for retirement," Escalera said.
Moving to a less expensive area isn't always the solution it once was. Another MyPerfectResume report found only nine states experienced real gains in purchasing power between 2020 and 2024 after accounting for inflation and regional living costs.
"While some parts of the country are certainly more affordable than others, workers across much of the country are seeing their paychecks stretched by higher living expenses," Escalera said.
"When housing, healthcare and other essential expenses are taking up more of your paycheck, something else may have to give," she continued. "For some workers, that may be the amount they can put toward retirement. And if that continues over several years, it can ultimately change how much they've saved and when they can realistically afford to retire."
How To Keep Saving for Retirement Despite Inflation
While workers can't control inflation, they can take steps to strengthen their financial position and increase the amount available for retirement savings. Escalera recommended focusing on increasing earning potential and taking full advantage of workplace benefits.
One place to start is evaluating whether your compensation reflects your current responsibilities.
"Think about the work you're doing today compared with the role you were originally hired to do," Escalera said. "Maybe you've taken on larger projects or responsibilities that extend beyond your original role, or you're contributing at a much higher level than when you started. If that's the case, it may be time to have a conversation about your compensation and whether there is an opportunity for a raise or promotion."
It can also be helpful to understand what similar roles are paying elsewhere.
"That doesn't necessarily mean you have to leave your job tomorrow," Escalera said. "Start by activating your network and getting a better sense of the types of opportunities and salaries that may be available to you."
Workers may also benefit from developing skills that qualify them for higher-paying positions and better advancement opportunities.
Just as important is making the most of employer-sponsored benefits, particularly retirement plans.
"If your employer offers a retirement match, understand what's available and whether you're taking full advantage of it," Escalera said. "Find out whether you have access to financial education, coaching or planning resources through your benefits that could help you better understand your retirement options."
For many Americans, today's high cost of living is making retirement feel further away than it once did, but taking steps to boost income, maximize workplace benefits and prioritize long-term saving can help offset some of the financial pressures standing between workers and their retirement goals.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
More From MoneyLion: