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The average worker is struggling to save for retirement

Workers aged 55 to 64 have only saved a median $30,000

Updated:

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By:
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Mark Huffman
Reporter

Mark Huffman has covered consumer issues since 2004, with a special focus on protecting and empowering older adults. A former news correspondent for the Associated Press Radio Network, Westwood One, and ConsumerAffairs, Mark brings decades of journalistic experience to RetirementLiving.com. He is passionate about giving consumers a voice and helping them make informed decisions. Mark has also created educational content, including Senior Scam Alert, a video resource designed to help seniors recognize and avoid fraud. He holds a B.A. from the University of Kentucky and lives with his family in Richmond, Virginia.
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Key Insights

  • Preparing for retirement remains a major financial challenge for working Americans, with many lacking access to employer-sponsored savings plans and holding little to no retirement savings.
  • A new analysis finds that rising living costs and competing priorities — from housing to student loan payments — are crowding out long-term retirement savings.
  • Even workers nearing retirement age often have balances far below what experts say is needed for financial security in later life.

Preparing for retirement is becoming increasingly difficult for American workers, according to a new report from the National Institute on Retirement Security (NIRS), which warns that the nation’s retirement system remains fragile despite recent policy changes.

The report, Retirement in America: An Analysis of Retirement Preparedness Among Working-Age Americans, examines how well workers ages 21 to 64 are saving for retirement and how broader financial pressures are undermining long-term economic security. 

Drawing on data from the U.S. Census Bureau’s Survey of Income and Program Participation (SIPP), the study paints a sobering picture of uneven access to retirement plans, low savings balances, and growing tradeoffs between saving for the future and paying for today’s essentials.

One of the most significant findings is how little many Americans have set aside, even as they approach retirement. Among workers aged 55 to 64, the median amount saved for retirement is just $30,000. Across all working adults — including those with no retirement savings at all — the median balance is only $955.

“At a time when Americans are facing a growing affordability crisis, we need to recognize that retirement should be part of that conversation,” said Dan Doonan, executive director of NIRS. “Most retirement programs today rely on workers saving voluntarily, with the tension between saving and the cost of buying a home, daycare, and college creating enormous challenges for the middle class.”

Limited access

Access to retirement plans remains a major barrier. Many workers still do not have employer-provided retirement options, particularly in the private sector. 

Public sector employees are significantly more likely to be offered and participate in a retirement plan. The gaps are especially pronounced for Hispanic workers and for those with lower incomes or lower levels of education, who are far less likely to have access or to participate when plans are available.

Even for workers who are saving, contribution levels tend to be modest. Typical employee contributions to defined contribution plans, such as 401(k)s, range from five to six percent of pay, while employer contributions average just under three percent. As a result, balances often fall far short of what is needed to support a secure retirement.

The importance of Social Security

The report also underscores the continued importance of Social Security — and its limitations. For the typical older adult, Social Security provides roughly half of total income. Retirement plans, including both defined benefit pensions and defined contribution accounts, account for only about one-fifth of income on average, leaving many retirees heavily dependent on a single source of support.

“When too many households are forced to choose between paying their bills and saving for tomorrow, the system is not working,” Doonan said. “Strengthening access to reliable retirement plans is essential if we want Americans to retire with dignity rather than anxiety.”

Other findings show that retirement savings often lag behind other forms of wealth. On average, retirement accounts make up about one-quarter of financial assets for working adults, compared with roughly one-third tied up in home equity. For some workers, the median value of their vehicle is higher than their retirement savings.

Student loan debt is a problem

Student loan debt adds another layer of complexity. Workers with student loans are more likely to have access to and participate in retirement plans, but they tend to have lower balances, fall further behind savings targets, and have significantly lower net worth than workers without education debt.

Authored by NIRS Research Director Tyler Bond and Dr. Joelle Saad-Lessler of the Stevens Institute of Technology School of Business, the study also examines outcomes by age, income, education, race, and gender, as well as how retirement preparedness intersects with homeownership and other major financial commitments. The analysis is based on the 2023 SIPP panel, using December 2022 as the reference point.