6 Retirement Planning Stats That Americans Need to Know

As fulfilling as one’s work might be, most people anticipate a comfortable retirement with the freedom and ability to travel, spend time with family, and pursue other interests. The full retirement age in the United States is 67, but Americans can start claiming Social Security benefits at age 62. On its own, however, Social Security generally isn’t enough to cover basic living expenses, lifestyle demands, and other costs in retirement.

To complement their Social Security income, many people contribute to retirement savings accounts, such as Individual Retirement Accounts (IRAs) and employer-sponsored 401(k) plans. Building wealth through these and other investment vehicles can help workers better prepare for retirement. However, sometimes even high earners return to work part-time in retirement to help cover expenses. Millions of working Americans, meanwhile, have yet to start planning or saving for retirement.

Here’s a few notable statistics that present a snapshot of the current state of affairs in retirement planning in the US.

1. The Average Retirement Age for Men and Women Differs; Women Tend to Retire Sooner

Due to a number of factors, including inflation and changes made to full Social Security eligibility, Americans are retiring much later than they were 30 years ago. The average retirement age was 57 in 1991, but that increased to 61 by 2022, according to a Gallup survey of 1,018 adults.

Another recent study found that the average retirement age was 62.1 years for women and 64.7 years for men. Average life expectancy is up more than 10 years since 1950 (79.1 from 68.1), so Americans work longer and require greater savings than they once did. However, that’s just one of the many reasons for the increase in average retirement age.

“Changes to Social Security made work more attractive relative to retirement. The liberalization, and for some the elimination, of the earnings test removed what many saw as an impediment to continued work,” writes Alicia Munnell in a July 2022 brief for Center for Retirement Research at Boston College. “The increase in the Full Retirement Age (FRA) from 65 to 67 reduced benefits for those claiming early. And, the enhanced delayed retirement credit increased incentives to keep working between the FRA and age 70.”

Munnell also lists the percentage of workers with college degrees, decline of employer-sponsored health insurance, and the erosion of defined benefit plans as major factors in the increase of the average retirement age in the US.

2. Retirees Are Increasingly Engaging in Part-Time Work

Inflation and other factors are forcing many Americans to rethink what retirement looks like. In 2021, with inflation surging due in large part to the COVID-19 pandemic, 46 percent of Americans between the ages of 60–75 expected to have to pursue part-time employment in retirement, according to Forbes.

3. Retirement Savings by Age

Considering that more than three-quarters of working Americans are living paycheck to paycheck, it’s not surprising that about 56 percent of Americans feel they’re behind on their retirement saving goals. A 2019 survey conducted by Nationwide found that the average American starts saving for retirement at 31 years old, while Western & Southern Financial Group found that Americans between the ages of 25–35 have an average of $37,211 in retirement savings.

That figure increases to $97,020 for Americans between the ages of 35–44 and $179,200 for those aged 45–54. Americans between the ages of 55–64 had an average of $256,244 in savings and those 65 and older had $279,997.

4. Nearly One-Third of Workers Don’t Have Any Retirement Savings

If you haven’t started saving for retirement yet, you’re not alone. Multiple studies and surveys have shown that around one-third of working Americans have yet to contribute to a retirement savings account. About 58 million working-age Americans had no savings. Dave Ramsey suggested a similar figure in his 2023 State of Personal Finance report.

5. You May Need $1.8 Million to Retire Comfortably

There are many different savings estimates for a comfortable retirement. These estimates vary based on lifestyle and working income, among other factors. Many advisors suggest saving enough so that you can live on 80 percent of your annual pre-retirement income. In a 2023 Charles Schwab survey of 1,000 Americans contributing to 401(k) plans, participants believed they needed an average of $1.8 million for a comfortable retirement. Yet only 37 percent of respondents believed they would achieve this goal.

In the same survey conducted a year prior, Americans said they would need an average of $1.7 million to retire and 47 percent of respondents thought they would reach that target.

6 Making 401(k) Employee/Employer Contributions Makes a Big Difference

Employer-sponsored 401(k) or 403 (b) plans are critical components of a comfortable retirement. These plans offer matching employer funds for employee contributions. In 2024, employees under 50 years old can contribute as much as $23,000 per year to a 401(k) plan and, according to Vanguard, Americans contributed an average of 7.4 percent of their salary to these plans in 2022. The average 401(k) employer contribution, meanwhile, was 4.5 percent. For workers over age 50, the annual maximum contribution to a 401k or 403b plan is $30,500 in 2024.

7 A Successful Retirement is Built on Income-not Assets!

It may seem obvious, but it is worthy stopping to think about — and that is that once you stop working, it is really an income story! You may have money saved in various accounts, but that is not income — that’s assets. Some portion of what you have been able to accumulate by the time you fully or mostly retire needs to be devoted to the generation of secure, sustainable income streams, for as long as you live. It is dangerous to assume you will just pull off dividends, or interest or capital gains from your overall portfolio every year as you need income. There are down cycles in the markets and economy periodically, and if your portfolio falls significantly, like 35% or 50%, and does not recover quickly ( the so-called “lost decade” phenomenon), and you need to tap those depressed accounts for living expenses, that can be devastating, and you could potentially run out of money. It is wise, if you will not have an employer sponsored pension in retirement, to build a private pension of guaranteed income for life, using fixed index IRA annuities. If these are converted to ROTH IRAs, the lifetime income stream is tax free!