Retirement crisis: why Americans don’t save more for retirement

Summary 

What are the reasons Americans don’t save more for retirement? 

While the vast majority of Americans are aware of the need to save for retirement, many struggle to do so.  

According to CNBC’s August 2024 Your Money retirement survey, 82% of American workers say achieving a comfortable retirement is much harder or somewhat harder than it was for their parents’ generation.  

Some of the main reasons, according to various sources, that Americans don’t save for retirement include:  

These issues are being faced by Americans across the board, including those nearing retirement and those still some way off struggling to save.  

What percentage of Americans have no retirement savings? 

According to an AARP survey, one in five Americans aged 50 and over have no retirement savings.  

Unsurprisingly, according to the same survey, over half (61%) of Americans are worried they won’t have enough money to support them in retirement.  

Similarly, data from the U.S. Census Bureau found that 50% of women and 47% of men between the ages of 55 and 66 have no retirement savings. 

These stats demonstrate a startling lack of financial security and readiness amongst those nearing retirement age. With today’s 65-year-olds expected to live another 20 years, according to the Social Security Administration (SSA), this issue is only set to worsen.  

Why are people worried about the future of Social Security? 

Social Security is intended to support peoples’ retirement income, with the monthly check being a major source of income for most people over the age of 65.  

According to the SSA, the total amount of benefits paid in 2024 will total about $1.5 trillion.  

However, this money is not infinite.  

Without intervention, the trust fund, which pays the benefits, is set to become insolvent in 2035. While Social Security will still exist post 2035, retirees will only receive 83% of their full benefits, according to the trustees’ findings. 

This is cause for concern for many Americans.  

Solutions to this issue need to be enacted by Congress, with strategies to resolve the issue, including cutting Social Security benefits, increasing taxes, or the age at which people can start claiming benefits.  

Is America in a retirement crisis? 

Many experts and commentators have stated that the US is facing a serious retirement crisis.  

According to a recent nationwide survey of working-age Americans by the National Institute on Retirement Security, 79% agreed that the nation faces a retirement savings crisis.  

This is unsurprising when you consider the stats around retirement, such as:  

While the government has sought to improve Americans’ retirement readiness with the introduction of the SECURE Act 2.0, which made legislation changes designed to encourage employees to contribute to their employer's 401(k) or 403(b) plans, the impact of these is yet to be determined.  

As 2025 sets to bring about a new President and, with them, a proposed host of new legislation changes, retirement is set to remain a prominent issue.  

How can you increase your retirement savings? 

One of the most important aspects of saving for retirement is starting as early as possible.  

But, if you’re nearly closer to retirement and want to boost your savings, there are several strategies you can adopt. 

These include: 

1. Take advantage of catch-up contributions 

Those aged 50 and over at the end of a calendar year can make annual catch-up contributions to their retirement account.  

In 2024, you contribute an extra $7,500 to your 401(k) or 403(b) account.  

Those with an IRA (traditional or Roth) can contribute an additional $1,000. 

These catch-up contributions allow you to input more into your retirement funds in the years when you would be traditionally earning more.  

While these contributions are designed to help those late to the retirement saving game, everyone can benefit from bulking up their savings before they exit the workforce.  

2. Ensure you’re maximizing your benefit match 

If you have a 401(k) or 403(b), your employer may contribute to your plan in the form of an employer match. This means both you and your employer are contributing to your retirement savings.  

For example, an employer may commit to match their employee's retirement contributions up to 5% of their wages.  

However, according to Empower, a financial services company, 25% of workplace savers do not contribute enough to maximize their employer match.  

Essentially, this means they are leaving “free” money on the table. By increasing your contributions to get the most from your employer, you can benefit from even more money going into your retirement fund.  

3. Delay collecting your Social Security benefits 

You can start collecting your Social Security benefits as early as age 62. However, these will be at a reduced rate.  

According to the SSA, depending on your birth year, you can expect a reduction of between 25%-30% if you choose to start receiving benefits at 62.  

Your full retirement benefits only become available once you reach full retirement age. Again, this age depends on the year you were born; you can find a full breakdown here.  

By prolonging the time you take to start receiving your Social Security benefits, even after your full retirement year, they will continue to grow in value. However, this growth ends when you turn 70, after which you will receive no additional benefit increase by delaying claiming your benefit.    

4. Get expert retirement advice 

Working with an expert financial advisor can help increase your savings.  

According to multiple industry studies, professional financial advice can add 1.5%-4% to annual portfolio returns over the long term.* 

A financial advisor can help you navigate the complex world of retirement saving; they understand the intricacies of financial planning and can help navigate all aspects that go into a robust and successful retirement plan. 

Unbiased can match you with an SEC-regulated financial advisor for free. We’ll find the right financial advisor suited to your unique needs; all you have to do is tell us a bit about what you’re looking for, and we’ll take care of the rest.  

Get started now.  

* Certain industry studies estimate that professional financial advice can add 1.5%-4% to annual portfolio returns over the long term, depending on the time period and how returns are calculated. The methodologies used in these studies vary greatly. Please see the list of studies below and follow their respective links to see important differences in the methodologies. Actual investment returns are not guaranteed, and results may vary greatly as net performance is dependent on numerous factors, including market conditions, inflation, contributions, investment selection and fees, including those charged by your investment advisor.  
Envestnet, Capital Sigma: The Advisor Advantage 2019 estimates advisor value add at an average of 3% per year;  
Russell Investments 2019: Value of a Financial Advisor Update estimates value add at more than 4% per year;  
Vanguard, Putting a Value on Your Value: Quantifying Vanguard Advisor’s Alpha® 2019 estimates lifetime value add at an average of 3%;  
Morningstar Investment Management, The Value of a Gamma-Efficient Portfolio, 2017 estimates value add for a subset of the service identified in this paper at an average of 1.5% per year.