A lot of Americans are approaching retirement age without the assets to fund retiring. And many are justifiably worried about the situation, a new study shows.
The investment firm Schroders commissioned the survey asking retired Americans how they are navigating the shortfall. The answer was: not well.
Inflation, for one thing, weighs on them, the Schroder study noted. Sure, the Consumer Price Index’s growth has slowed since the end of the pandemic, when a re-opening of the economy found too few goods available to meet hungry demand. As of September, the CPI had climbed 2.9% from 12 months prior, which was about a third of the rate right after COVID-19. And inflation boosts are cumulative. Overall, prices have climbed more than 15% since the end of the pandemic.
Retirees sure feel that. “Rising prices on essentials like housing, food, and healthcare have significantly diminished the purchasing power and financial security of retirees,” wrote Deb Boyden, the U.S. head Schroders’ defined contribution section.
Per the Schroders report, almost one in five retirees are “struggling or worse.” Some 35% of retirees said they have lost sleep worrying about their finances. Plus, 27% spend an hour or more daily fretting about money.
Getting into the weeds, only 40% of respondents think they have enough money for retirement, 45% said their expenses in retirement are higher than expected and 62% had “no idea” how long their savings will last.
Large majorities, from 72% to 92% depending on the question, think inflation has eroded their assets, healthcare is higher than anticipated and they don’t know how to generate income or draw down those assets. The respendents overwhelmingly fear that a major market downturn will significantly shrink their assets and that they will outlive their assets.
Of course, a good number are getting by or even thriving: 5% contended they “are living the dream,” and 37% said they are comfortable and 39% indicated they are “not great but not bad,” the Schroders poll found.”Just 16% reported they are “struggling” and 3% were “living the nightmare.”
According to the 2025 Vanguard “How America Saves Report,” people aged 45 to 54 have an average savings balance of $188,643. That’s far from what they will need. The so-called 4% rule holds that you should withdraw only that amount from your nest egg to avoid outliving your money. So you would be forced to get by on $7,546 annually. Fat chance.
The standard approach to this anxiety is to keep working. But what if their health has deteriorated, and they can’t work? Or they are laid off and age discrimination bars them from getting another job.
They often find out this out when it is too late to scramble and pump up their net worth. Asset accumulation is best done gradually over a working lifetime. “People often dismiss how much they will need,” noted Dave Goodsell, executive director of the Natixis Center for Investor Insight, in an interview.
Examining the possible downside is a key part of financial planning. A good dollop of dread may be what’s needed to propel folks into much-needed planning.