Even though developing a nest egg for retirement takes years of saving and planning, the majority of American workers claim they are already falling behind.
According to a recent survey conducted by YouGov for Bankrate, 37% of workers polled believe they are “significantly behind” in their retirement savings, making up about 56% of those who feel they are falling behind.
The majority of people who are close to retirement age—6 in 10 baby boomers and nearly 7 in 10 Gen Xers—say they are not financially prepared to stop working. However, even younger generations believe they are falling behind; 49% of millennials and 42% of Gen Zers, those between the ages of 18 and 26, share this anxiety.
According to a Charles Schwab survey conducted in August, Americans feel they need an average of $1.8 million to retire comfortably, which is nearly $100,000 more than they estimated they needed the previous year. According to analysts, a year of soaring inflation, which devoured workers’ savings, has raised the threshold for the amount individuals anticipate they’ll need in retirement.
A majority of Americans say they are not where they need to be to achieve their retirement savings goals in light of the turbulent developments of the past few years, including a brief but severe recession and a period of high and sustained inflation, according to Bankrate Senior Economic Analyst Mark Hamrick.
1 in 5 people don’t save.
The Bankrate study indicated that over half of those who claimed they knew how much money they would need to retire said they didn’t think they would be able to save that much.
A quarter of baby boomers and a fifth of Gen Xers said they aren’t contributing to their retirement accounts this year and won’t be contributing to them in 2022, despite older workers being more likely to claim they aren’t ready for retirement.
Nevertheless, some employees are increasing their retirement payments this year despite the impact of inflation and other challenges. According to the survey, almost 25 percent of workers stated they will be contributing more to their retirement accounts in 2023 than they did in 2018.
2,527 American adults, including 1,301 who work full-time, part-time, or are unemployed temporarily, responded to the poll. Participants’ online responses were gathered between August 23 and August 25, 2023.
Concerns about Social Security
Workers are under increased pressure to save more money for retirement as Social Security, the retirement program for the elderly and disabled in America, faces an uncertain future. The Social Security Trustees report indicates that the trust fund reserves for Social Security could exhaust in 2033, which would cause a 25% reduction in benefits for all beneficiaries.
According to forecasts made by insurance company Allianz Life, 72% of Americans say they do not expect to include Social Security benefits in their retirement income plans, and 79% say they are similarly concerned about the future of Medicare.