Retirement Reality Check: Survey Reveals 51% of Workers Are Behind on Savings
Nearly half of Americans (49%) believe they're on track for retirement. However, a survey of 1,000 U.S. workers from MyPerfectResume suggests many may be overestimating their preparedness.
In reality, most Americans are behind on retirement savings or haven't started saving at all, highlighting a significant gap between retirement confidence and financial reality.
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Here's what the survey revealed about Americans' retirement readiness and what workers can do now to strengthen their long-term financial outlook.
More Americans Expect To Retire Later Than Planned
For many Americans, retirement timelines are shifting further into the future. When asked how their expected retirement age had changed over the past three years, 35% of workers said they now expect to retire later, while 55% expect to retire at age 65 or later. In addition, 14% don't expect to fully retire at all.
"Retirement plans are often based on what we think our financial lives will look like years down the road, but those expectations can change when the cost of everyday life changes," said Dr. Jasmine Escalera, career expert at MyPerfectResume.
"Someone may have expected to be contributing more to retirement at this point in their career, only to find that more of their income is still going toward immediate expenses," she continued. "If you're able to save less than you anticipated or your income isn't stretching as far as you expected, working longer may feel like the most realistic way to give yourself more time to prepare financially."
More Than Half of Workers Said They're Running Behind
While 49% of workers believe they are on track or ahead of schedule with retirement savings, the survey found that most are not where they want to be financially. Fifty-one percent said they are behind on retirement savings or haven't started saving yet, while only 16% feel they are ahead of schedule.
"One of the biggest consequences of falling behind on retirement savings is that workers may eventually have fewer choices about when and how they retire," Escalera said.
"For some, catching up could mean having to put more money toward retirement later in their careers, which may be difficult if they're already struggling with the cost of living. And if they aren't able to close that gap, they may have to work longer than they originally planned or rethink when they can retire financially."
Why Workers Are Struggling To Save for Retirement
For many workers, the lack of retirement savings isn't due to motivation, but to their financial circumstances.
"It is important not to automatically assume that someone who is behind hasn't made retirement a priority," Escalera said.
When asked about the biggest barriers preventing an earlier retirement, respondents identified the following challenges:
Cost of living: 64%
Not earning enough income: 37%
Healthcare costs: 31%
Housing costs: 30%
Debt: 30%
"Many workers are trying to save for the future while also dealing with the cost of living today," Escalera said. "If more of someone's income has to go toward things like housing or healthcare, or they're paying down debt, there may simply be less money left to put toward retirement. That can make it difficult to save consistently, even when they're thinking about retirement and trying to prepare for it."
To boost retirement savings, workers often focus on reducing expenses, but Escalera said there is a limit to how much most households can realistically cut.
"If a large portion of your income is already going toward necessities like housing or healthcare, those aren't expenses you can simply eliminate," she said. "At some point, reducing what you spend may only get you so far."
Instead, Escalera suggested paying close attention to income growth opportunities.
"If you've gone through your expenses and there still isn't enough room to save what you need for retirement, it may be worth considering how you can increase your earnings," she said. "That could start with looking at whether there is room for a raise in your current role. You can also explore what your skills and experience may be worth elsewhere or whether building a new skill could open the door to a higher-paying opportunity."
Many Workers Doubt They'll Ever Fully Retire
Although the majority of Americans (68%) are somewhat or very confident they will be able to fully retire someday, 20% aren’t very confident and 12% say they aren’t at all confident.
"Workers may lack confidence in retirement because many already feel stretched by the cost of living today," Escalera said. "So much of their paycheck may be going toward basic living expenses that there simply isn't much left to consistently put toward retirement. When that's your financial reality right now, it can be hard to imagine how you'll eventually save enough to fully step away from work."
The challenge may be compounded by wage stagnation. According to a separate report, 41% of employees said it has been more than two years since they last received a raise.
"Meanwhile, the cost of everyday life continues to take up a significant portion of people's income," Escalera said. "So where does the additional money for retirement savings come from? For some workers, I think that's a very real question."
Steps To Improve Retirement Readiness
No matter where you fall on the retirement confidence spectrum, there are practical steps you can take to improve your financial readiness.
One place to start is evaluating your income potential.
"Take a look at what you're earning today and ask yourself whether your current career path is likely to give you the income growth you'll need over time," Escalera said. "If you've taken on more responsibility in your current role and your compensation hasn't changed, it may be worth having a conversation about a raise or what it would take to move into the next level."
It's also important to understand what your skills may be worth in today's job market.
"You don't have to be actively looking for a new job to start paying attention to the market," Escalera said. "Some proactive steps include talking to people in your network or looking at the types of roles that could be your next step and what they pay. You may discover that there are opportunities to earn more or that developing a particular skill could put you in a stronger position soon."
Workers should also make sure they're taking full advantage of employer-sponsored retirement benefits.
"This includes understanding what your company offers regarding retirement contributions and whether you're taking full advantage of any employer match available to you," Escalera said. "You can also find out whether your benefits include access to financial education or planning resources."
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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