Why Americans worry changes to the U.S. retirement system could upend their plans (2024)

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Why Americans worry changes to the U.S. retirement system could upend their plans? ›

The more than 2,500 Americans surveyed said certain factors are most likely to throw them off course — for example, an increasing cost of living that will make it harder to save and the U.S. government making significant changes to the retirement system.

WASHINGTON (TND) — Working-age Americans are worried about retiring. In fact, according to polling from the National Institute on Retirement Security, 55% are worried they won't be able to achieve financial security in retirement, and 79% agree there is a retirement crisis. The retirement gap, too, is on the rise.

A recent report found that the number of Americans age 65 and older who are cost-burdened by housing costs has increased, rising healthcare costs are higher for older Americans who are more likely to have multiple chronic health conditions, and long-term care costs represent an increasing challenge for many older ...

Among the chief shortfalls of the U.S. retirement system is access to a workplace retirement plan, experts said. About half of workers don't have access and are unlikely to save for retirement outside a 401(k)-type plan, they said.

A new 2024 Annual Retirement Study from Allianz Life found that an eye-popping two in three Americans — 63% — said they worry more about running out of money than death. And this fear is on the rise: the figure is up from 57% in 2022, Allianz noted.

The more than 2,500 Americans surveyed said certain factors are most likely to throw them off course — for example, an increasing cost of living that will make it harder to save and the U.S. government making significant changes to the retirement system.

Retirement anxiety is a growing trend

And as our recent research has highlighted, it's a significant and growing issue. More than half of UK adults aged 40 years+ who we spoke to are anxious about retiring, with both emotional and financial drivers cited.

The retirement-savings cliff

The number of US workers in the labor market over the age of 75 is expected to nearly double over the next decade according to the Bureau of Labor Statistics, creating a looming retirement crisis. Retirement savings in the United States were long thought of as a three-legged stool.

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.

Longevity risk

The Society of Actuaries estimates that a couple both reaching age 65 have a 50% chance that one surviving spouse will live until age 93 (25% chance of one surviving spouse living until age 98). The biggest threat retirees face is outliving their savings.

How many Americans retire with no savings? ›

1 in 5 adults ages 50+ have no retirement savings, and more than half are worried they will not have enough money to support them in retirement, according to a new AARP survey. The study reflects concerns amid a shaky economy, high prices and an uncertain future.

In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved.

The key reason for this is that the importance of Retirement Planning is not clearly understood yet. Other reasons have got to do with personal preferences, attitudes, and life situations. The net result is insufficient funds in hand post retirement.

In 2019, about 63 percent of white households had a retirement account balance compared to about 41 percent of households of all other races. Among households that had retirement savings in 2019, white households had double the median balance of all other races ($164,000 to $80,300, respectively).

Americans think they need almost $1.5 million to retire. Experts say to focus on another number instead. Americans' “magic number” savings goal for retirement has increased by over 50% since 2020. But experts say the secret to building true wealth is having a high savings rate.

But most people are far from reaching that objective, with the study finding that the average amount held in a retirement account today is just $88,400. That means that the typical worker has a $1.37 million gap between their actual savings and their retirement aspirations.

What are the average and median retirement savings? The average retirement savings for all families is $333,940, according to the 2022 Survey of Consumer Finances. The median retirement savings for all families is $87,000. Taken on their own, those numbers aren't incredibly helpful.

1. Saving Enough Money: Perhaps the top retirement concern is the idea that without steady employment, it might be difficult to have enough resources to maintain your preferred lifestyle. The cost of living can be high, and Social Security benefits may not be enough to cover all your living expenses.

22 percent of Americans haven't contributed to their retirement savings in the past year, according to a recent Bankrate survey. 29 percent of Gen Z said they aren't saving for retirement, the same Bankrate survey found.

However, between 2016-2022, just 32% of US adults 60-64 and 70% of US adults 65-69 were retired.