Why it’s so hard for Americans to retire (2024)

FAQs

Why it’s so hard for Americans to retire? ›

One culprit lies in changes to the country's pension system, which sets the US apart from countries like Australia and the UK, which help people save money for retirement.

Another big part of the problem when it comes to saving for retirement is that savings plans are not universally available in the U.S. Almost half of private sector employees ages 18 to 64, or 57 million Americans, do not have the option to save for retirement at work.

The majority of retirees surveyed believe that they will need $1.46 million in the bank to retire comfortably, according to Northwestern Mutual's 2024 Planning & Progress Study.

Many older adults worry about how they're going to afford to live in retirement. They may be concerned about running out of money, not being able to afford healthcare, or not being able to maintain their current lifestyle (or achieve their dream retirement lifestyle).

You may have to rely on Social Security

Many retirees with little to no savings rely solely on Social Security as their main source of income. You can claim Social Security benefits as early as age 62, but your benefit amount will depend on when you start filing for the benefit.

As many as 28% of Americans have nothing saved for their retirement, 39% aren't contributing to a retirement fund and another 30% don't think they'll ever be able to retire.

According to the Federal Reserve's latest Survey of Consumer Finances, only about 10% of American retirees have managed to save $1 million or more. This leaves a significant 90% who fall short of this milestone.

When asked when they plan to retire, most people say between 65 and 67. But according to a Gallup survey the average age that people actually retire is 61.

What is the average social security check? ›

Overall total average payments for the state of California: Total number of beneficiaries: 6,166,205. Total benefits: $9,340,498,000. Average total benefits: $1,515.

With $400,000, if you buy an annuity at age 62 and then retire, you might expect monthly payments of around $2,400 for the rest of your life. This comes to about $28,800 per year in guaranteed income according to one estimate.

And this estimate is no different. Northwestern Mutual surveyed 4,588 adults and found: The new “magic” number for a comfortable retirement is $1.46 million. It's up 15% from last year's $1.27 million number and is also an eye-popping 53% higher than the 2020 estimate.

Claiming Social Security too early

Unfortunately, most people don't — and many early retirees regret how soon they claimed their Social Security benefits. Research from the National Bureau of Economic Research (NBER) revealed that one-fifth of older Americans wish they had put off their Social Security claim.

1. Not having enough money: This is the number one fear of retirement, and for good reason. The cost of living continues to rise, and Social Security alone may not be enough to cover all of your expenses.

The government-backed-guaranteed return schemes should be the first choice. These are the Senior Citizen Saving Scheme (SCSS), Pradhan Mantri Vaya Vandana Yojana (PMVVY) and Post Office Monthly Income Scheme (PO-MIS).

Saving is hard. Few jobs offer traditional pensions anymore. A 401(k) puts the burden of financial management largely on the employee. And Social Security is a labyrinth of complex regulations and difficult calculations, administered by a seemingly indifferent bureaucracy.

You may worry about managing financially on a fixed income, coping with declining health, or adapting to a different relationship with your spouse now that you're at home all day. The loss of identity, routine, and goals can impact your sense of self-worth, leave you feeling rudderless, or even lead to depression.

What are two reasons Americans don't save more for retirement? Aside from inflation, respondents cited stagnant or reduced income, new expenses and the desire to keep more cash on hand as key reasons they're not saving more.