As millions of Americans approach or rethink retirement, the urgency to build a financial cushion has never been greater. The landscape of retirement readiness reveals stark contrasts—from those confident in their nest eggs to those facing the prospect of entering their later years with little or no savings.
This article examines the state of preparedness, unpacks the confidence gap, identifies key barriers, and presents long-term growth strategies for individuals, policymakers, and employers alike.
Recent data shows that only about 42% of Americans expect to maintain their current lifestyle when they retire. Income disparities drive this figure, with higher earners faring much better. In contrast, only 15% of the lowest-income baby boomers feel on track—though that figure could rise to 42% if certain economic conditions improve.
The average defined contribution plan balance stood at $134,128 in 2023, with those 65 and older averaging $272,588. Yet the median account balance for retirees is just $88,488, underscoring wide inequality in retirement holdings.
Consider the following median savings by age group (2025 estimates):
Surveys reveal a paradox: 67% of workers and 78% of retirees claim they can live comfortably in retirement, yet only 24% feel "very confident." Confidence peaks among younger workers and erodes sharply after age 45. In the past year, one-third of workers have postponed plans, and nearly 30% intend to partially retire.
The median expected retirement age is 65, yet many aim for 70 or beyond. Reality often intervenes: 40% of retirees actually stop working earlier than planned, usually due to health issues or family responsibilities. Nearly half of older Americans plan part-time work in retirement, and 1 in 12 believe they may never retire at all.
Top concerns include inflation, rising living costs, and healthcare expenses. A significant 64% of savers fear outliving their nest egg—a 10% increase from last year. Meanwhile, savings rates are slipping; the median rate in 2025 is 10%, down from 12% in 2022.
Alarmingly, 55% of households aged 554 have less than $25,000 saved, and 41% have nothing. Overall participation in retirement accounts is mixed: about 50% of those under 35 and just over 60% of those 354 hold any retirement savings.
Several policy and employer initiatives have driven participation and savings growth. Since 2025, the SECURE Act 2.0 mandates automatic enrollment and annual escalation of contribution rates for most new 401(k) plans. As a result, automatic enrollment and escalation features can boost participation by up to 91 percentage points within a year.
Employer matching contributions have become more generous, and the adoption of target date funds now reaches 54% of Gen X and 81.5% of Gen Z plans. These target date funds for set-and-forget portfolios help savers stay on course without frequent adjustments.
Interest in guaranteed income solutions is on the rise: 74% of savers would set aside more if their plans offered annuity-like products. Additionally, diversification into private markets is gaining traction as investors seek higher long-term returns in a low-yield environment.
To build a robust retirement foundation, individuals should:
The retirement landscape continues to evolve with policy and industry trends designed to close the savings gap. Key developments include:
Recordkeepers saw a rollover boom in 2023, with IRAs attracting $4.5 billion from departing baby boomers. As younger generations benefit from auto features and target date funds, generational disparities in savings are expected to narrow.
Retirement readiness is not just a matter of numbers—it reflects broader societal challenges, including income inequality and unequal access to financial education. Improving outcomes requires collaborative efforts from individuals, employers, policymakers, and financial professionals.
By adopting evidence-based strategies and supporting innovative policy measures, we can close the confidence gap and ensure more Americans enjoy a financially secure retirement.
The path forward demands action today; every percentage point saved, every policy improved, and every individual educated brings us closer to a future where retirement is a time of fulfillment, not financial worry.
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