The Retirement Savings Gap Is Over Half a Million Bucks — What's Causing It?
There's a stark divide in savings among U.S. retirees. A new ZipRecruiter report found that while the median retiree or pre-retiree, ages 60 and up, has just $100,000 saved, the average tops $639,000 — a gap that reveals how uneven financial security has become.
Put simply, most people don't have enough for retirement, while those at the top have far more than enough.
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Here's a closer look at what this savings gap tells us.
Why the $100K vs. $639K Gap Is So Wide
The gap between the median and average retirement savings reflects how a small group of high earners skews the data upward. The median shows what a typical American has saved -- half are below $100,000 and half are above -- while the average is pulled higher by a small number of wealthy households.
"The mean of over $639,000 compared to the median of $100,000 shows that a small share of high-net-worth individuals outperform the typical 60-plus experience," said Nicole Bachaud, economist at ZipRecruiter.
This tracks income inequality in the U.S. in general, where the top 10% of households account for over two-thirds of all household wealth and the bottom 50% account for just 2.5%.
"While average account holdings might look healthy, most people in their retirement age have deep financial struggles — a large reason many stay employed later in life," Bachaud said.
Americans' Retirement Goals Don't Match Reality
A second gap is just as concerning: what Americans have saved versus what they say they need. While the median savings among Americans who are fully retired is $100,000, the median savings goal is $250,000. That means that many Americans are starting retirement $150,000 behind — if they can afford to retire at all.
This reality explains some of the other alarming findings:
Less than half (49%) of fully retired adults say their savings are sufficient.
42% of fully retired adults say their savings fall short, causing them to change their lifestyle plans.
How Workers Can Start Closing the Gap Now
Among workers who are not yet retired, the median retirement savings is $150,000, while the median savings goal is $400,000. That $250,000 gap may seem daunting, but for workers still saving, there’s time to close it. Bachaud recommends the following:
Focus on finding an employer that offers a 401(k) match and max out the match.
For older workers, take advantage of catch-up savings limits and other tax breaks and benefits.
"But most importantly, make a plan for retirement — even for younger workers who might be decades away from stepping into retirement," Bachaud said. "Compounding growth means the earlier savings start, the better their financial outlook will be in the future."
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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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