Most Americans are missing out on retirement savings — are you one of them?

Maria Simsic /

Editor’s Note: This story originally appeared on

When it comes to retirement savings, American workers have a lot of work to do. A recent survey by the Insured Retirement Institute found that workers between the ages of 40 and 73 do not have enough retirement savings to cover their income needs, and they are not saving enough to make up for what they missed. The online survey of 990 workers in March 2021 sheds new light on delayed savings rates, unrealistic retirement income projections and the widespread lack of basic retirement planning.

Savings rates are dropping

Elderly woman counting money in front of the piggy bank
Prostock-studio /

There are two primary factors leading to a shortage of retirement savings in America.

First, there are not enough people actively saving for retirement. One in four workers surveyed has no savings at all, confirming the identical finding from a recent PwC study.

Second, those who make money for retirement don’t save enough. The IRI survey found that 51% of workers surveyed had less than $50,000, while only 20% had more than $500,000. Only 8% saved at least $1 million.

The IRI survey also questioned how much workers’ salaries they save for retirement. While 57% save less than 10% of their income, an entire third of respondents said they saved less than 5%, which is far less than the 10% to 15% that experts recommend people save.

“Among savers, savings rates are not high enough for even the smallest responders to grow their nest eggs to a level sufficient to meet income and budget expectations,” the study said. “With 60% of respondents reporting an annual household income of less than $100,000 and more than half saving less than 10% of their income, the prospects for a secure retirement look bleak.”

Unrealistic income expectations

big woman carrying money
Anton Mukhin /

The IRI survey also found that unrealistic retirement income expectations are prevalent among workers over the age of 40. Despite the general lack of confidence in having adequate income at retirement (only 44% said they were confident), many workers have strong expectations about retirement income. In fact, 58% of respondents believed they would need at least $55,000 in annual retirement income, including 35% who said they would need at least $75,000.

“A significantly high proportion of workers expect to need an annual retirement income of more than $75,000 in today’s dollars,” the study said. “This is remarkable because, as described earlier, they are neither, nor have they, nearly enough to meet that expectation.”

Insufficient planning

The couple is planning their retirement
goodluz /

One of the most eye-catching findings from the IRI survey was the widespread lack of retirement planning. Only 4 in 10 participants said they had tried to calculate how much they would need to meet their retirement income expectations. In fact, only 36% of participants between the ages of 62 and 66 attempted to calculate this number.

Some may have pensions. The study concluded that some may believe that they will work until past retirement age or that they will continue to earn income during retirement. “But for those who do not have these plans, understanding how much income savings they can produce is critical.”

What you can do differently

pathdoc /

Perhaps the most direct and simple answer to the question of how to improve an individual’s retirement odds is to save early in your career. In fact, 67% of survey respondents said they regretted not starting saving early, making it the #1 regret people reported having.

Saving for retirement early in your career can have a profound effect on future savings. Consider the difference in retirement savings between a 25-year-old making $50,000 a year and a 50-year-old earning $100,000. Both workers save 10% of their annual income in their 401(k) plan, but the younger worker has more time to build the nest egg.

Even if an older worker has $50,000 saved for retirement by age 50, that worker’s 401(k) is worth just over $400,000 by age 65. A young 25-year-old has twice the time contributions to accrue and earn compound interest . The 25-year-old 401(k) is worth more than $1.1 million by age 65, highlighting the importance of time in the marketplace. (Many retirement planners suggest that a typical 401(k) portfolio generates an average annual return of 5% to 8%, so both scenarios assume an annual rate of return of 6.5%.)

25-year-old worker:

  • Income: $50,000
  • Contribution amount: 10%
  • Current retirement savings: $0
  • Retirement savings at 65: $1,134,226

50-year-old worker:

  • Income: $100,000
  • Contribution amount: 10%
  • Current retirement savings: $50,000
  • Retirement savings at 65: $401,030

Then again, if saving early in your career isn’t an option, extending your career may be an option. About 30% of survey respondents said they thought they would retire before age 65, but working into your late 60s can help you increase your retirement savings. Delaying Social Security for several additional years may be a viable option. Doing so will increase your annual benefit, although you will need to do a break-even analysis to determine the optimal time to claim Social Security based on your life expectancy.


Old people put coins in a jar
Rob Marmion /

When it comes to retirement planning, it appears that a large percentage of American workers who are at least 40 years old need help. According to an IRI survey conducted earlier this year, 1 in 4 workers have absolutely nothing saved for retirement and only 40% of people have actually tried to calculate how much they will need. There is a clear value to saving early in one’s career, as evidenced by the comparison between a 25-year-old and a 50-year-old.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click on links in our Stories.