A new study from the Morningstar Center for Retirement & Policy Studies shows a troubling trend: almost half of American households will run short of money in retirement if they stop working at 65.¹
This sobering statistic isn’t just a number—it’s a wake-up call for anyone dreaming of a comfortable retirement.
Here are the key factors contributing to this predicament and potential strategies to boost your chances of a fully funded retirement.
One in Five Americans Over 50 Have No Retirement Savings
An AARP survey found that 20% of adults ages 50 and older have no retirement savings, and more than half (61%) are worried they will not have enough money to support them in retirement. (ref)
The findings also show a decline in overall financial security among men, with 42% describing their financial situation as “fair” or “poor,” up from 34% in early 2022.
Despite this, about 40% of men who regularly save for retirement believe they are saving enough, compared to 30% of women.
Nearly one-third of older adults who carry over a credit card balance from month to month report carrying a balance of $10,000 or more, while 12% described their balance as $20,000 or more, up from 8% roughly a year ago.
One in Four Adults Over 50 Expect to Never Retire
According to the AARP survey, a staggering 25% of U.S. adults aged 50 and above who have not yet retired anticipate never retiring. At the same time, around 70% of this demographic worries about prices escalating faster than their income.
The proportion of individuals aged 50 and above who claim they will not retire has been steadily increasing, at 23% in January 2022 and 24% in July of the same year.
David John, senior strategic policy advisor at the AARP Public Policy Institute (ref), commented, “We are observing a growing trend of older workers continuing to work beyond the traditional retirement age. This is partly due to insufficient retirement savings. It’s a pressing issue that is likely to persist as we move forward.”
Strategies to Boost Your Chances of a Fully Funded Retirement
Researchers at Morningstar suggest two critical strategies that can significantly enhance your chances of having sufficient funds during retirement and potentially passing on wealth to your heirs:
- Invest in a workplace retirement plan. Morningstar’s research indicates that 79% of Americans with at least 20 years of future contributions to a defined contribution plan, such as a 401(k) or 403(b), are likely to have adequate funds to cover their expenses in retirement.
- Carefully time your retirement. The later you retire, the better your financial outlook. Morningstar estimates that 45% of households retiring at age 65 will not have enough funds, while this percentage drops to 28% for those who postpone retirement until age 70.
Other strategies include maximizing your Social Security benefits, growing your portfolio sufficiently for long-term withdrawals, and working part-time if you lack sufficient savings.
The retirement security landscape is changing, and many Americans face a vastly different reality than their parents and grandparents.
However, with the right strategies and careful planning, you can increase your chances of a fully funded retirement and maintain your desired lifestyle in your golden years.
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Martha A. Lavallie
Martha is a journalist with close to a decade of experience in uncovering and reporting on the most compelling stories of our time. Passionate about staying ahead of the curve, she specializes in shedding light on trending topics and captivating global narratives. Her insightful articles have garnered acclaim, making her a trusted voice in today's dynamic media landscape.
