Are Americans Winging Their Retirement Plans?

Across the United States, many workers say they value a secure retirement, yet a large share are still approaching this life stage without a detailed plan, adequate savings, or a realistic understanding of what retirement will cost.¹ Surveys regularly show gaps between what people expect from retirement and what their finances are likely to support, raising the question: are Americans winging their retirement plans?

This article explores how prepared Americans are for retirement, what the data says about savings and planning habits, and how individuals can move from vague hopes to concrete, achievable retirement strategies.

How Americans Feel About Retirement

Feelings about retirement are mixed. Many workers remain optimistic, but a growing share express stress and declining confidence in their ability to retire comfortably.¹ Several trends stand out:

• Financial stress is rising: Recent surveys report that a significant portion of U.S. adults feel more financially stressed than in prior years, citing high living costs, debt, and lack of emergency savings as key drivers.¹
• Retirement confidence has slipped: As daily financial pressures mount, roughly one-third of Americans say they feel less confident about meeting their retirement goals than they did the year before.¹
• Long-term goals often take a back seat: When budgets are tight, people tend to prioritize immediate expenses over long-term savings, making retirement planning easy to postpone.

Despite this, many people still express a desire to “do better” with money. A substantial share resolve each year to manage their finances more carefully, pay down debt, and increase savings, but follow-through is inconsistent.¹

The Reality of Retirement Savings

Survey and government data indicate that a large number of households are not saving enough for retirement, especially as they approach their 50s and 60s.² Several statistics illustrate the gap:

• About half of U.S. households age 55 and older have no retirement savings in a 401(k)-type plan or an IRA.²
• Among households age 55–64, around 55% have less than $25,000 in retirement savings, and roughly 41% have zero retirement savings at all.²
• For households 55 and older that do have retirement accounts, the median balance is about $109,000—an amount that may not support decades of retirement for many people.²

These figures suggest that a substantial fraction of older Americans will need to rely heavily on Social Security, continue working longer, or significantly reduce spending in retirement.²

Heavy Reliance on Social Security

For many retirees, Social Security provides the foundation of income, but it was never intended to be the only source of support. In practice, however:

• About half of households age 65 and older depend on Social Security for the majority of their income in retirement.²
• Lower-income households in particular may rely almost entirely on Social Security, leaving little room to handle rising costs, health expenses, or unexpected shocks.²

This reliance raises concerns about whether retirees will be able to maintain their standard of living, especially if personal savings are minimal.

Who Is Most at Risk of Winging It?

Not all groups face the same level of retirement risk. Certain demographics are more likely to lack formal plans or sufficient savings.

Households Approaching Retirement

People in their late 50s and early 60s are close to retirement age, but many still have limited savings.² Some contributing factors include:

• Entering the workforce before 401(k)-style plans became common.
• Career disruptions, caregiving responsibilities, or periods without employer-sponsored plans.
• Debt carried into later life, including mortgages, medical debt, or support for adult children.

Because these households have less time to save, shortfalls are harder to correct.

Younger Workers and Millennials

One might expect younger workers to be in good shape because they have more time to save. However, research indicates that many millennials and younger adults are not consistently saving for retirement:²

• Roughly two-thirds of working millennials have no retirement savings.²
• Only a small minority are saving at the 15% level (including employer contributions) often recommended by financial professionals.²

While younger generations benefit from better access to workplace plans and automatic enrollment in some cases, student debt, housing costs, and wage pressures can make it difficult to contribute enough.

Low- and Moderate-Income Workers

Income plays a major role in retirement readiness. Research shows that older adults in lower income brackets are far less likely to be financially prepared than those at higher income levels.³ Among baby boomers, for example, retirement readiness is heavily concentrated among the top third of earners, while readiness is much lower for those in the bottom income tiers.³

Workers with lower incomes often lack access to workplace retirement plans and have less capacity to save, making it more likely they will reach retirement with limited assets.³

Work, Aging, and Delayed Retirement

As Americans live longer and face uncertain finances, more people are working later in life. Labor statistics show that more than 9 million Americans age 65 and older were working at least part-time as of 2018, a roughly 60% increase over the prior decade.² Projections suggest that labor force participation among older adults will continue to grow.²

The Bureau of Labor Statistics projects that between 2016 and 2026, the labor force growth rate for workers:

• Age 65–74 will exceed 50%.
• Age 75 and older will grow by over 90%.

In contrast, growth in the overall labor force is projected to be much slower.² This indicates that working longer is increasingly common, whether by choice or necessity.

Why Older Americans Keep Working

Older adults may remain employed for several reasons:

• Financial necessity: Insufficient retirement savings, high medical costs, or ongoing financial responsibilities.
• Access to benefits: Continued access to health insurance and employer retirement plans.
• Personal fulfillment: Desire for social engagement, purpose, or gradual transition into retirement.

However, not everyone can count on working longer due to health issues, caregiving duties, or job market constraints, which makes early planning critical.

The Role of Retirement Plans and Access

Access to workplace retirement plans is a major determinant of whether people save adequately. Workers who can contribute to defined contribution (DC) plans such as 401(k)s are generally in a much stronger position than those without such access.³

• Workers with DC plan access are roughly twice as likely to reach their retirement savings goals as those with no access.³
• Universal access to DC plans could significantly increase the share of workers on track for retirement, especially among younger generations.³

Plan features such as automatic enrollment, automatic contribution increases, and diversified default investments have helped improve savings behavior for many employees.³

Wealth Differences by Plan Access

Comparisons of workers with and without access to DC plans highlight the impact of these vehicles on long-term wealth. In 2022, data indicate that:

• The median worker with access to a DC plan held about $83,000 in non-housing net wealth, equal to approximately 1.3 times their income.³
• The median worker without access to a DC plan had about $13,000 in non-housing net wealth, or roughly 0.4 times their income.³

This gap illustrates how having a plan—and using it consistently—can materially improve retirement readiness.

Home Equity and Other Resources

While many Americans lack large retirement account balances, some have significant wealth tied up in their homes. Among baby boomers, homeownership is very common; nearly 9 in 10 own a home.³ For some, tapping home equity may help close retirement funding gaps.

Potential strategies include:

• Downsizing: Selling a large home and buying a smaller, less expensive property to free up cash and reduce ongoing expenses.
• Relocating: Moving to a region with a lower cost of living, which can stretch retirement savings further.
• Renting after selling: Selling a home and choosing to rent, converting home equity into investable assets.

For lower-income older adults, unlocking home equity can significantly change their retirement outlook. Research suggests that for baby boomers in the lowest income category, incorporating home equity could increase the share projected to be retirement-ready from 15% to more than 40%.³

Are Americans Planning or Winging It?

Putting all these pieces together suggests that many Americans are, to some degree, winging their retirement plans:

• A large share of near-retiree households have little or no dedicated retirement savings.²
• Many workers cannot clearly state how much they need to retire or how they will generate income beyond Social Security.
• Planning often focuses on vague goals rather than specific, measurable targets for savings rates, retirement age, and spending.

At the same time, there are positive signs: expanded access to DC plans, automatic enrollment features, and rising awareness of retirement challenges are helping more people get on track, particularly among younger workers.³

Practical Steps to Build a Stronger Retirement Plan

Even if someone feels behind, there are practical ways to move from improvisation to a more deliberate retirement strategy. Common steps recommended by financial professionals and supported by research include:¹²³

1. Define a Clear Retirement Vision

Instead of a vague idea of “retiring someday,” outline concrete details:

• Target retirement age or range (for example, 65–67).
• Desired lifestyle (travel, hobbies, part-time work).
• Where you plan to live and expected housing costs.

These decisions help estimate how much income you will need.

2. Estimate Retirement Income Needs

Many planners suggest aiming to replace a significant portion of pre-retirement income, often somewhere between 70% and 80% for middle-income households, though the appropriate rate varies by situation. A detailed budget that accounts for housing, healthcare, food, transportation, and leisure can provide a more tailored target.

3. Make Systematic Use of Workplace Plans

If a 401(k) or similar plan is available:

• Contribute at least enough to receive the full employer match, if offered.
• Consider gradually increasing contributions each year, especially after raises.
• Review default investment options and adjust to match your risk tolerance and time horizon.

Workers without access to a workplace plan can explore IRAs or other tax-advantaged options where available.

4. Address High-Interest Debt

High-interest consumer debt can crowd out retirement savings. Creating a plan to reduce or eliminate such debt can free up cash flow to invest for the future.

5. Plan for Healthcare and Long-Term Costs

Healthcare can be a major expense in retirement. Considering health insurance, Medicare, supplemental coverage, and potential long-term care needs in advance can prevent unpleasant surprises.

6. Revisit the Plan Regularly

Retirement planning is not a one-time exercise. Reviewing progress annually—adjusting savings rates, investment strategies, and retirement age if needed—helps keep plans aligned with changing life circumstances and market conditions.

Frequently Asked Questions (FAQs)

Q: How much have typical near-retiree households saved?

A: Among U.S. households age 55 and older that have retirement accounts, the median balance is around $109,000, and more than half of households age 55–64 have less than $25,000 saved for retirement.²

Q: Is Social Security enough to fund retirement by itself?

A: For about half of households age 65 and older, Social Security provides most of their income, but it is generally not designed to fully replace pre-retirement earnings. Financial experts typically recommend supplementing it with personal savings, pensions, or other income sources.²

Q: Are younger workers better positioned for retirement?

A: Younger workers often have better access to defined contribution plans and benefit from automatic enrollment features, which improve their outlook. However, many millennials and younger adults still have not started saving and may contribute less than recommended levels, creating potential shortfalls decades from now.²³

Q: Does working longer significantly improve retirement readiness?

A: Yes. Continuing to work can delay withdrawals from savings, increase Social Security benefits if you claim later, and provide more years to contribute to retirement accounts. Labor force projections show that more adults age 65 and over are working compared with previous generations.²

Q: What is one of the biggest differences between those who are ready for retirement and those who are not?

A: Access to and consistent use of workplace retirement plans is a key differentiator. Workers with access to defined contribution plans are about twice as likely to meet their retirement savings goals as those without such access, and they typically accumulate substantially higher non-housing wealth.³

This article is general information, not personal financial advice. Consider your own situation, or speak with a licensed adviser, before acting on it.