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For many American workers, the biggest question about retirement isn’t how they’ll spend their free time, it’s if they’ll be able to retire at all. Retirement has become another financial milestone, like homeownership or starting a family, that isn’t guaranteed for workers in 2023.
Nearly one in three (32 percent) U.S. adults working full-time, part-time or who are temporarily unemployed estimate they would need more than $1 million to retire comfortably, but 45 percent of workers say it’s unlikely they’ll be able to save enough to do that, according to a new Bankrate poll.
More than half (56 percent) of Americans in the workforce think they’re behind where they should be with their retirement savings, but that doesn’t mean retirement is impossible. No matter how much you have in retirement savings now, starting to save is better than not saving at all.
Amid the tumultuous developments of the past several years, including a short but severe recession and a period of high and sustained inflation, a majority of Americans say they’re not where they need to be to achieve their retirement savings goals. Compared to our survey about a year ago, there’s been no progress on this front. Those closer to retirement age are among those feeling this sense of urgency the most.— Mark Hamrick | Bankrate Senior Economic Analyst
Bankrate’s key retirement insights
- The percentage of workers who think they’re behind on their retirement savings has remained relatively unchanged since 2022. 56% of American workers feel behind where they think they should be on their retirement savings, including 37% who feel “significantly behind.” Only 16% say they feel they are ahead of where they should be, including 6% who feel “significantly ahead.” 21% feel right on track. In September 2022, 55% of American workers said they felt behind and 35% felt “significantly behind.”
- Around one-quarter of workers haven’t made retirement contributions in at least a year. 22% of American workers said they weren’t making retirement contributions in 2023 or 2022. 25% say they are contributing more to their retirement savings than they have since August 2022. 36% say they are contributing around the same amount as last year and 17% said they are contributing less.
- Workers’ ideal retirement fund can reach seven figures. 32% of U.S. workers say they would need more than $1 million in retirement funds to retire comfortably.
- The slim majority of workers believe it’s likely they’ll be able to save enough to retire comfortably. 52% of American workers say it’s likely they’ll be able to save enough to retire comfortably. 45% think it’s unlikely they’ll have enough to retire comfortably and 3% don’t know.
Over 1 in 3 American workers think they’re ‘significantly behind’ on their retirement savings
The majority (56 percent) of U.S. adults in the workforce say they’re behind where they should be in retirement savings — including 37 percent who feel “significantly behind.”
Only 16 percent of American workers feel that they are ahead of where they should be in contributing to their retirement plan, including 6 percent who feel “significantly ahead.” Another 21 percent of workers feel that they are right on track to save for retirement.
The percentage of people who feel behind on their retirement savings remains relatively unchanged since Bankrate’s September 2022 poll. At the time, 55 percent of workers said they were behind on their retirement savings and 35 percent said they were “significantly behind.”
“Retirement savings goals seem to be slipping through Americans’ fingers,” Bankrate Senior Economic Analyst Mark Hamrick said. “Armed with information and financial resources, they can turn this around and gain a firmer grasp.”
Gen Xers (ages 43-58), who are nearing the end of their prime working years but are still too young to retire, are the most likely generation (69 percent) to say they’re behind in saving for retirement. Meanwhile, 60 percent of baby boomers (ages 59-77), 49 percent of millennials (ages 27-42) and 42 percent of Gen Zers (ages 18-26) say the same:
Source: Bankrate survey, August 23-25, 2023
Notes: Of U.S. adults who are working full-time, part-time or temporarily unemployed; Not all percentages in the chart add to 100 due to rounding, and percentages in the text may differ from the chart due to rounding for generational categories.
Gen Zers are the most likely generation (23 percent) to say they’re ahead of saving for retirement. Only 21 percent of millennials, 11 percent of Gen Xers and 9 percent of baby boomers say they’re ahead.
One in four (25 percent) baby boomers say they’re right on track for retirement, compared to 14 percent of Gen Xers.
“While inflation over the past couple of years might be a likely culprit for those struggling to meet their savings goals, the good news here is that wage growth now outpaces the rate of inflation,” Hamrick said. “At the same time, the job market remains tight, and the unemployment rate is still historically low, providing ample opportunity for income. Not tomorrow, but now, is the time to prioritize retirement savings for those who are employed or expect to be soon working.”
Nearly 1 in 4 workers haven’t contributed to their retirement in at least a year
Only one in four (25 percent) workers say they are contributing to their retirement savings more since August 2022 than they did in the previous year. While 36 percent said they were contributing about the same amount as last year, 17 percent said they were contributing less than last year and 22 percent said they weren’t contributing last year or now.
Millennials are the generation most likely (31 percent) to be contributing more to their retirement than they did last year, compared to 18 percent of baby boomers:
Source: Bankrate survey, August 23-25, 2023
Note: Of U.S. adults who are working full-time, part-time or temporarily unemployed; Not all percentages in the chart add to 100 due to rounding, and percentages in the text may differ from the chart due to rounding for generational categories.
Gen Zers are the most likely generation to say they are saving less compared to last year (17 percent) and that they didn’t save this year or last year (29 percent). Also, only 15 percent of baby boomers said they were saving less compared to last year and 26 percent said they didn’t save this year or last.
“No matter where individuals are in their financial journey, younger or more senior, retirement savings needs to be a top priority, along with saving for emergencies,” Hamrick said. “Procrastination is not a successful strategy because it will only make attaining these goals more challenging. The benefit of starting sooner is even more significant for younger individuals because of the power of compounding over time.”
Workers who make less than $50,000 annually are least likely to contribute more to their retirement year-over-year. However, higher-income households don’t necessarily have a higher chance of contributing more to their retirement year-over-year:
- Less than $50,000: 17 percent
- $50,000-$79,999: 28 percent
- $80,000-$99,999: 24 percent
- $100,000 or more: 34 percent
Also, those with at-most a four-year degree are most likely to contribute more to their savings year-over-year, more than those with a post-graduate degree:
- High school diploma or less: 21 percent
- Some college: 22 percent
- Four-year degree: 28 percent
- Post-graduate degree: 33 percent
Many workers say they would need over $1 million in retirement savings to feel comfortable
Historically, financial experts have recommended saving $1 million for retirement. Now, 32 percent of American workers say they would need more than $1 million saved to fund their retirement and live comfortably:
Source: Bankrate survey, August 23-25, 2023
Note: Of U.S. adults who are working full-time, part-time or temporarily unemployed
However, a large percentage of workers (25 percent) don’t actually know how much they would need to have saved to fund retirement and live comfortably. Baby boomer workers, who are either close to retirement age or are already old enough to retire, and the most likely generation to not know how much they need to retire:
- Gen Z: 22 percent
- Millennials: 24 percent
- Gen X: 25 percent
- Baby boomers: 29 percent
Similarly, households with a yearly income under $50,000 are the most likely of any income bracket to not know how much they would need to retire:
- Less than $50,000: 28 percent
- $50,000-$79,999: 23 percent
- $80,000-$99,999: 15 percent
- $100,000 or more: 12 percent
Also, more than half (56 percent) of those without a college degree don’t know how much they need to retire:
- High school diploma or less: 32 percent
- Some college: 24 percent
- Four-year degree: 22 percent
- Post-graduate degree: 14 percent
More than half of workers say they’ll likely be able to save enough to retire comfortably
Though the majority of workers (52 percent) say it’s likely they’ll be able to save enough to retire comfortably, 45 percent of workers say it’s unlikely.
Source: Bankrate survey
Note: Of U.S. adults who are working full-time, part-time or temporarily unemployed with a retirement goal in mind; Not all percentages add to 100 due to rounding.
Retirement savings build over time, and accordingly, younger generations are more likely to feel optimistic that they’ll save enough to retire. Millennials are the most likely (62 percent) of any generation to say they believe they’ll be able to save enough to retire comfortably and the least likely (34 percent) to say they don’t think they’ll be able to save enough.
Gen Xers are the most likely (57 percent) of any generation to not feel optimistic that they’ll save enough for retirement.
3 steps to find out how much you need for retirement
You may know you need to save for retirement, but do you know how much to save? Is $100,000 enough? How about $1 million? Not everyone needs the same amount for retirement, so there’s no single answer. Consider these options to figure out how much you will need to retire comfortably:
1. Consider your options.
Can’t tell your 401(k)s from your Roth IRAs? The best retirement account for you will depend on factors like your employment status, what kind of organization you work for and your financial goals. A 401(k), for example, is one of the most popular tax-advantaged types of retirement accounts offered by employers, where you contribute your pre-tax wages, often matched in part by your workplace. People may also open different kinds of IRA plans, such as a traditional IRA, where you contribute money earned through working pre-tax, like a 401(k), or a Roth IRA, where you contribute after-tax funds. Because Roth IRAs are after-tax, you won’t pay additional taxes when you take out the money after you hit age 59 1/2.
2. Do the math.
When you begin saving for retirement, your current income, inflation rate and many other factors all play into how much you can expect to save. A retirement plan calculator can help. “By using one of Bankrate’s many convenient and easy-to-use retirement calculators, identifying a specific savings goal can help provide important insights regarding potential paths forward,” Hamrick said. “Think of it like using a roadmap, or GPS, for your financial journey.”
3. If you need more advice, seek professional help.
Still stuck? You aren’t alone. Seeking professional advice, like from a fee-only financial advisor, is a common way to navigate the confusing world of retirement. “It is important to remember that while retirement might be seen as a destination, one also needs to take into consideration the funds needed for as long as they’re living,” Hamrick said. “Along with digital tools, a financial planner or adviser can also be helpful.” If you’re looking for a financial advisor, check out Bankrate’s financial advisor matching tool, answer a few quick questions and get matched with vetted professionals in minutes.
How much money you need to retire depends on your lifestyle and goals. Traditionally, financial experts advise saving roughly 10 times your yearly salary by age 67.
The average 401(k) balance is $112,572 as of 2022, according to Vanguard’s “How America Saves 2023” report.
Iowa, Delaware, West Virginia, Missouri and Mississippi are the best states to retire in the U.S., according to a Bankrate study.
All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,527 US adults, of whom 1,301 are working full-time, part-time or temporarily unemployed. Fieldwork was undertaken between 23rd – 25th August 2023. The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+). The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.