The Employee Benefit Research Institute and Greenwald Research released their Retirement Confidence Survey, revealing a significant disconnect between retirement savings and expectations among American workers.
Approximately 33% of Americans believe they need $1.5 million or more to retire comfortably. However, an equal share of respondents reported having less than $50,000 in savings, with 14% having less than $1,000 saved.
Only 28% of workers expect to retire at age 65, according to the survey findings. More than half anticipate working beyond that age, while three-quarters expect to work during their retirement years.
The survey calculated that workers with $50,000 saved at age 50 would accumulate only $138,000 by age 65, assuming a 6% annual return. This amount falls far short of the $1.5 million target many respondents identified.
Younger workers appear particularly vulnerable, with just 36% expressing confidence in their retirement prospects. The survey noted that those who calculate their retirement needs based on lifestyle expenses show greater confidence in reaching their goals.
Social Security is expected to provide about 40% of pre-retirement income for most workers, according to the survey data. Respondents who account for Social Security in their planning reported higher confidence levels.
The survey highlighted practical approaches to retirement saving, including setting milestone goals and automating savings contributions. It noted that saving $500 monthly from age 30 to 40 could yield $100,000 in ten years at a 6% return.
Workers with access to employer-sponsored retirement plans like 401(k) accounts were encouraged to take full advantage of matching contributions. The survey found those who automate their savings or work with financial planners report greater confidence in their retirement readiness.