Americans approaching retirement age are severely underprepared for leaving the workforce, according to a major insurance company.
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Prudential Investments said the U.S. is in the midst of a “midlife retirement crisis” because many Americans age 55 don’t have enough money to live comfortably in retirement. The survey found that 55-year-olds have a median retirement savings of $47,950.
Future retirees are falling far short of the recommended goal of saving eight times their annual salary by age 55. 67% of 55-year-olds expect to live past their current savings, compared with 59% of 65-year-olds and 52% of 75-year-olds.
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Prudential also found that a third of 55-year-olds and 43% of 65-year-olds have already postponed retirement due to inflation and the rising cost of living. To make up for financial shortfalls, 48% of 55-year-olds plan to work part-time after retirement, compared with 25% of 65-year-olds and 13% of 75-year-olds.
Seniors are counting their pennies at the table. Surveys show that the median retirement savings for people aged 55 today is less than $50,000.
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This not only impacts future financial planning, but also current planning: 35% of 55-year-olds surveyed said they would not be able to easily scrape together $400 within a month for an unexpected emergency, compared with 19% of 65-year-olds and 15% of 75-year-olds.
The challenges facing soon-to-be retirees impact other age groups, too. Millennials and Gen Z adults who have relied on financial support from their parents may soon have to give back: 24% of 55-year-olds expect to need financial support from their family once they leave the workforce, double the 12% of 65-year-olds and 12% of 75-year-olds.
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The survey also found that 21% of 55-year-olds expect to need housing assistance, compared with 12% of 65-year-olds and 9% of 75-year-olds.
People who are currently 55 will reach the average retirement age of 65 at a time when the Social Security Administration (SSA) is expected to run out of funds. Benefits could be cut by up to 17 percent if lawmakers don’t act. The survey found that 83 percent of 55-year-olds say they are unlikely to rely on Social Security retirement benefits, compared with 74 percent of 65-year-olds.
“While rightly focused on the roughly 11,000 65-year-olds reaching retirement age each week today, we also need to focus on opportunities as an industry to support younger workers who are approaching a critical decade until retirement,” said Caroline Feeney, executive vice president and head of Prudential’s U.S. operations.
“Furthermore, the economic future of certain generations, such as women, is particularly precarious,” Feeney added. “On the positive side, with the right planning and strategies in place to protect their lifelong work, this generation will be well-equipped to not only live longer, but also live better.”
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Newsweek is committed to challenging conventional wisdom, seeking common ground and finding connections.
