Most U.S. Workers Age 45+ Don’t Anticipate a Comfortable Retirement

Respondents to a new survey say retiring comfortably will take $1.1 million in savings; only one in five will hit $1 million.

By Rethinking65

For the second year in a row, working Americans age 45 and older say on average it will take about $1.1 million in savings to retire comfortably, according to the Schroders 2023 U.S. Retirement Survey. Unfortunately, only 21% expect to reach the $1,000,000 mark, down from 24% in 2022. More than half (59%) expect to save less than $500,000 for retirement, including 34% who anticipate saving less than $250,000.

The percentage of non-retired Americans nearing retirement age (60-67 years old) who said they have enough money to retire was just 24%, a slight uptick from 22% in 2022.

Meanwhile, millennial workers (ages 27-42) expect on average it will take approximately $1.3 million to retire comfortably, but only 29% say they expect to reach $1 million in retirement savings. Almost half (49%) expect to save less than $500,000, including 27% who forecast less than $250,000 in savings by retirement.

‘Profound gaps’

“There are profound gaps between what American workers say they need for a comfortable retirement and what they expect to have,” said Deb Boyden, Head of US Defined Contribution, Schroders.

“This could be from a lack of planning, or for many it might just be too hard to save and invest enough to reach their retirement goals,” she says. “The fact that, once again, so few Americans nearing retirement are confident they have enough money speaks volumes about the work we still need to do. All of us, from employers to advisors to our industry, must do more to make it easier for American workers to reach retirement security.”

Anxiety, lost sleep and health concerns

Almost two-thirds (64%) of working millennials and 53% of older workers are concerned that financial stress will negatively affect their overall health.

The majority of older workers (56%) and working millennials (55%) said the 2022 stock market greatly increased their anxiety. Almost half (49%) of millennial workers have lost sleep worrying about their financial situation, as have 40% of workers 45 and older.

Of workers age 45 and up, 69% said they worry each day about money; those that do spend on average 1.6 hours or about 11 hours each week. This adds up to approximately 24 days a year. Millennial workers spend even more time worrying about money, 28 days a year, the survey found.

High cash balances

Half (50%) of older workers with a workplace retirement plan said the 2022 performance of their plan caused them anxiety. And 62% of older workers with workplace retirement plans worry they won’t be able to grow their plan assets to the level they hoped to achieve.

Fear is prompting many older workers to hold a significant amount of cash in their retirement investments (including workplace plans, IRAs, or other retirement accounts), says Schroders. Specifically, two-thirds (66%) of older workers say they have so much cash because they are afraid of losing too much money if the stock market goes down.

In 2022, workers age 45 and older, on average, allocated 29% of their retirement-account assets to cash. The balance of their retirement assets included equities (31%), fixed income (16%), target-date funds (13%) and other (10%).

Another point of concern: 24% of older workers (and 38% of millennials) say they have no idea how their retirement assets are allocated.

Among older workers with a workplace retirement plan, 65% left their allocations unchanged in 2022, 25% became more conservative, and 10% invested more aggressively.

“Given the performance of stocks and bonds last year, it’s not surprising that fear of losing money heavily influenced asset allocations, but cash shouldn’t be king, especially for millennials saving for retirement,” says Joel Schiffman, Head of Strategic Partnerships, Schroders.

Help wanted

Older workers said the most helpful financial advice they received last year came from their financial advisor (30%), financial websites/publications (25%), and family (24%). Another 11% said they got advice from their workplace retirement plan provider and 7% said their employers. One-quarter didn’t seek out advice.

Interestingly, 39% of older workers with workplace retirement plans said they wish they received more guidance from their employer in 2022 on how to invest the money in the plan.

The Schroders 2023 U.S. Retirement survey was conducted by 8 Acre Perspective among 2,000 U.S. investors nationwide ages 27-79 ( those ages 27-44 were included for the first time). The survey was conducted from February 13 to March 3 in 2023. The median household income for working Americans surveyed was $75,000.


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