A shocking new report reveals an impending retirement crisis with most Americans falling dangerously short of savings targets – and the situation only worsening. Read on to understand the scope of the under-saving epidemic, its impact on retiree livelihoods, and expert tips to course-correct your own retirement planning while you still can.
Plummeting Savings Place Comfortable Retirement Out Of Reach
Retirement security has reached crisis levels, with the average retirement savings having plummeted to $170,726 in 2023, a 10% freefall from $191,659 just a year earlier.
This figure falls drastically short of recommended targets, with financial experts advising $555,000 in savings for Americans to sustain typical retirement lifestyles. A meager 12% of current retirees have successfully amassed this much.
Even more alarming, over a third of all retirees (37%) have absolutely no retirement savings at all, reflecting a substantial increase from 30% in 2022. With many forced into early unplanned retirement resulting from health challenges, savings intended to finance decades of retired life are evaporating practically overnight.
The Saving Struggle Intensifies With More Americans Carrying Debt Into Retirement
Making matters worse, a significant majority (71%) of retirees are burdened with an average non-mortgage debt totaling $19,888 as they enter retirement. With medical expenses a primary driver of this debt, along with credit cards and other costs of living, monthly debt payments eat away funds needed for daily expenses.
This helps explain recent research showing almost half of retirees (44%) are now struggling to afford basic necessities like groceries and healthcare. And with few assets to leverage, they have no means of making ends meet as expenses continue rising faster than retirement income.
Even Well-Off Retirees Fall Short Of $1 Million Savings Target
While saving a million dollars might seem like an unrealistic goal, it is the benchmark typically recommended for an abundant retirement income that supports travel and other indulgences. But even for relatively well-off retirees, amassing this magic million-dollar number remains elusive.
Only 8-10% of retirees have successfully saved a million or more, reflecting substantial challenges in achieving this gold standard. For most Americans, this feat remains far out of reach if they have failed to establish diligent saving and investing strategies much earlier in their working careers.
Sudden Retirement, Inflation Place Retirement Goals Further Out Of Reach
In assessing the key factors undermining retirement preparations for many, an inability to remain employed full-term looms large. Well over half – 65% – of recent retirees stopped working earlier than planned, with health issues hastening unwanted retirement ahead of schedule. With fewer working years to bolster their nest eggs, savings suffer significantly.
Likewise, sky-high inflation reaching 40-year highs has deteriorated the purchasing power of retirement investment accounts. An overwhelming majority of retirees (83%) confess that rising inflation has noticeably impacted retirement savings, forcing dramatic financial adjustments.
Paying a hefty price, 45% report a reduced standard of living in an era of skyrocketing costs for travel, dining out, entertainment, and even essentials like food and gas. Forced frugality has replaced the visions of an active comfortable retirement so many have worked towards.
Retirees Voice Regrets Over Retirement Planning
Looking back on decades of financial decisions leading up to retirement, today’s retirees express profound regrets over failure to prioritize retirement planning soon enough. A significant majority now recognize lack of preparation, with 51% admitting they simply did not adequately prepare.
Many deeply regret poor money management skills that left them playing catch up just before retirement. Others underestimated true retirement costs by a long shot, finding sums that once appeared substantial quickly evaporating. Nearly all wish they had invested more aggressively early on to maximize investment returns over time.
Retirement Specialists Offer Course Correction Tips
While the current retirement landscape may appear bleak, experts agree it is not too late for most Americans to correct course and work towards a secure retirement. Taking the following steps can help mitigate savings shortfalls before reaching retirement age:
- Start saving aggressively immediately, even small sums add up enormously over years
- Eliminate all high interest debts
- Work with a financial advisor to create an optimized investment portfolio mix based on your timeframe and risk appetite
- Fully utilize tax advantaged retirement plans, contributing up to federal limits
- Consider alternative assets classes like art to further diversify holdings
- Delay social security benefits until age 70 for radically higher monthly checks
The verdict is clear – consistent saving, debt reduction and smart investing remains the formula for retirement readiness. Dodging an outcome of financial instability requires early course correction, but disciplined saving habits established today can still offer you retirement security tomorrow.