Retirement should be the reward for decades of hard work, but the numbers tell a different story. Almost half of Americans have saved exactly zero dollars for their retirement years. This isn’t just about young workers who have time to catch up—we’re talking about people in their 50s and 60s who are rapidly approaching retirement age with empty savings accounts. The problem goes beyond just having money in the bank, too. Even people who have managed to save something often lack a clear plan for how they’ll actually use that money once they stop working. The reality is that millions of Americans are heading toward a financial cliff, and many don’t even realize how close they are to the edge.
The shocking truth about how many people have nothing saved
The statistics are genuinely alarming when you look at the actual numbers. Various surveys show that anywhere from 20% to 46% of American adults have no retirement savings at all. That means up to nearly half of the country is planning to rely entirely on Social Security checks when they stop working. A Gallup survey found that 40% of adults have no investments earmarked for retirement whatsoever. Meanwhile, AARP discovered that one in five adults over age 50 are in the same boat. The Federal Reserve’s research showed 28% of non-retired adults have zero saved, and FINRA’s study revealed that 43% don’t even have a retirement account to their name.
These aren’t just numbers on a page—they represent real people who will face serious struggles in their later years. The Northwestern Mutual study added another worrying detail: more than half of Generation X, many now entering their 60s, admit they won’t be financially prepared when retirement arrives. What makes this especially troubling is that these folks are running out of time to fix the problem. You can’t just snap your fingers and create a retirement fund when you’re 58 years old and have nothing put aside. The window for building wealth through compound interest has largely closed for this group, leaving them with few good options.
Who’s actually at the highest risk right now
The retirement savings crisis doesn’t affect everyone equally. People in their 50s and 60s who haven’t saved much face the most immediate danger because they have virtually no time left to catch up before they need that money. Generation X workers feel the least confident about their retirement prospects, with more than half expecting they simply won’t be ready financially. Low-income households struggle the most because they’re living paycheck to paycheck and often work for companies that don’t offer retirement plans. Without access to employer-sponsored accounts, they miss out on matching contributions that could help build their savings faster.
The problems extend beyond just poor families, though. Middle-income workers are increasingly feeling squeezed, with many unable to make ends meet each month and nothing left over to save. There’s also a significant racial gap in retirement plan participation—68.5% of white Americans had a retirement plan in 2023, compared to 56.5% of Black Americans and just 41.8% of Hispanic Americans. Women face particular challenges because they typically retire with smaller account balances due to lower lifetime earnings, time spent caregiving instead of working, and less access to employer contributions. This isn’t a problem that only affects one group—it’s widespread across American society.
Social Security alone won’t cover your basic expenses
Many people assume they can just live on Social Security checks when they retire, but the math doesn’t work out. Social Security typically replaces only about 40% of what you were earning before retirement. Think about that for a minute—if you were making $50,000 a year, you’d be trying to live on roughly $20,000 annually. That might cover rent or mortgage payments if you’re lucky, but what about food, utilities, car expenses, medical bills, and everything else you need? The answer is that it simply won’t be enough for most people to maintain anything close to their current standard of living.
The situation becomes even more dire when you consider that Social Security was never designed to be someone’s only source of income in retirement. It was meant to supplement pensions and personal savings. But traditional pensions have largely disappeared, replaced by 401(k) plans that require workers to save and invest on their own. For people with debt heading into retirement, the problem multiplies. Imagine trying to pay off credit cards or a mortgage on $1,700 a month, which is close to the average Social Security payment. Some people will have no choice but to keep working well into their 70s, and when health issues eventually force them to stop, they may face genuine poverty or need to rely on family members for support.
Having savings isn’t enough without a spending plan
Even people who have managed to save money for retirement often make a critical mistake—they don’t have an actual plan for how they’ll spend it. According to research from Allianz Life Insurance, only 44% of Americans have a retirement income plan. That means more than half of people don’t know when they’ll withdraw money, how much they’ll take out each year, or which accounts they’ll tap first. Kelly LaVigne from Allianz put it bluntly: if you don’t know how you’ll draw from your retirement assets for income, then you aren’t ready to retire. Without a clear strategy, you risk running out of money too soon or paying unnecessary taxes.
The lack of planning shows up in the spending habits of retirees. According to 401(k) Specialist magazine, 31% of Americans are overspending in retirement, burning through their savings faster than they should. Research from T. Rowe Price found that people with a formal financial plan had two to four times more wealth when they retired compared to those who just winged it. A study involving MIT AgeLab found that Americans scored an average of only 60 out of 100 on overall preparedness for longer lives. The weakest area was care planning, where people scored just 42 out of 100—meaning most folks haven’t figured out who will help them if they need assistance or how they’ll pay for it.
The tax implications of withdrawals catch people off guard
One of the biggest surprises for new retirees is discovering that their retirement account withdrawals come with tax bills. With most traditional IRA and 401(k) accounts, you’ll pay income tax on every dollar you take out. That means if you withdraw $40,000 in a year, you don’t actually get $40,000 to spend—you might only net $30,000 or less after federal and state taxes. The timing of these withdrawals really matters because taking out too much in a single year can bump you into a higher tax bracket and cost you thousands in unnecessary taxes.
This is where different account types make a huge difference. Roth IRAs work differently because you contribute money that’s already been taxed, which means your withdrawals in retirement are tax-free. Financial expert Suze Orman has been vocal about this, writing in her retirement guide that Americans should put “every single cent” into Roth accounts. If you have a gold IRA or other alternative retirement account, you’ll need to plan whether you want withdrawals as income or as the physical asset itself. About 45% of people surveyed said they’re unsure of the best method for taking distributions from their retirement savings. Getting this wrong can cost you a fortune in taxes and penalties, which is why financial advisors often earn their fees just by optimizing withdrawal strategies.
People underestimate how long they’ll actually live
Americans tend to assume they’ll die younger than statistics actually predict, according to research by Stanford University retirement expert Annamaria Lusardi. This miscalculation causes serious problems because if you think you’ll only live to 75 but actually make it to 90, your money needs to last 15 years longer than you planned. A 65-year-old woman today has a 40% chance of reaching age 90, while men the same age have a 30% chance. Those aren’t small odds—they mean retirement savings need to potentially last for 25 years or more after you stop working.
America’s population of seniors is expected to surge by 40% over the next 25 years, according to research from MIT AgeLab and John Hancock. Joe Coughlin, who founded MIT AgeLab, points out that we’ve never had this many older people living this long in human history. You can’t just copy what your parents did because they likely didn’t face three decades of retirement. The situation gets worse when you consider that Americans are spending more years in poor health, which drives up medical costs and may require paid care. Planning for 15 years of retirement when you might need 30 years is a recipe for running out of money when you’re too old to do anything about it.
Retirement planning extends far beyond just money
The MIT AgeLab and John Hancock study identified eight different aspects of longevity preparedness, and only one of them was about finances. The others included social connections with family and friends, keeping busy with meaningful daily activities, knowing who will care for you if you need help, modifying your home to stay independent longer, having access to healthcare and transportation, maintaining your physical and mental health, and preparing for major life changes. Americans scored lowest on care preparedness, with an average of just 42 out of 100. Most people haven’t identified who would help them change a lightbulb or drive them to appointments when they’re 91 years old.
The financial side remains important, though—Americans scored 64 for financial preparedness on average, but with huge gaps between rich and poor. People with less than $50,000 in assets scored 56 overall, while those with more than $3 million scored 65. Interestingly, people who worked with financial advisors scored 65, while those without advisors ranked 7 points lower. Good financial advisors don’t just manage your investments—they help you think through what your future will actually look like. Your zip code might predict your quality of life better than your 401(k) balance because local access to healthcare, stores, and community matters enormously as you age. Long-term care facilities can easily cost $6,000 per month or more, putting them out of reach for most Americans.
Solutions exist but require major changes
Experts have identified several potential fixes to help Americans save more for retirement. Expanding access to workplace retirement plans, especially for small businesses, would help millions of workers who currently have no way to save. Many states have created auto-IRAs, which are state-run programs that automatically enroll certain workers whose employers don’t provide retirement plans. Automatic enrollment in general has proven incredibly effective—participation rates jump from around 50-60% to as much as 85-95% when workers have to actively opt out instead of opting in. This simple change leverages human psychology to help people save.
Other proposed solutions include increasing incentives like matching contributions or tax credits aimed at lower-income households, improving education about when to take Social Security and basic retirement planning, and boosting Social Security and Medicare funding. Some experts suggest gradually increasing retirement ages to reflect longer lifespans, or automatically shifting employees aged 65 and older from employer health plans to Medicare. Without significant action from both employers and policymakers, the retirement savings gap will continue growing. The financial strain won’t just affect individuals—it will impact the entire U.S. economy as millions of unprepared retirees struggle to make ends meet.
Starting late is better than never starting at all
If you’re behind on retirement savings, the worst thing you can do is give up entirely. Even small amounts saved consistently can make a meaningful difference, especially if your employer offers matching contributions—that’s literally free money you’re leaving on the table if you don’t participate. People in their 40s and 50s can still take advantage of catch-up contributions that allow them to save more than younger workers in tax-advantaged accounts. The key is to start now rather than waiting another year, because every month of compound growth matters when you’re playing catch-up.
Consider working with a financial advisor who can help you create a realistic plan based on your actual situation rather than some ideal scenario. Services like FinancialAdvisor.net can match you with vetted professionals based on your specific needs and goals. You might also need to make hard choices about your lifestyle—working a few extra years, downsizing your home, moving to a lower-cost area, or picking up part-time work in retirement. These aren’t fun conversations, but they’re better than the alternative of running out of money at age 80. The good news is that with some planning and professional guidance, even people who are starting late can still build enough to avoid financial disaster in their later years.
The retirement crisis facing America won’t solve itself, and waiting for the government or employers to fix everything isn’t a strategy. Whether you’re 25 or 55, the best time to start planning and saving was yesterday, and the second-best time is today. Take an honest look at where you stand, get help from professionals if you need it, and start making whatever changes you can to improve your situation. Your future self will thank you for every dollar you manage to put aside and every bit of planning you do now.
