The typical U.S. worker has $955 saved for retirement, report finds

The recent report from the National Institute on Retirement Security sheds light on the alarming state of retirement savings in America. According to the report, the average American worker has less than $1,000 saved for retirement, highlighting the financial challenges that millions of individuals may face in their old age.

This figure takes into account workers with 401(k) and other retirement plans, as well as the approximately 56 million U.S. workers who do not have access to an employer-sponsored retirement plan. The median savings for all employed adults aged 21 to 64 is a mere $955, based on data from the U.S. Census Bureau’s Survey of Income and Program Participation.

Even for those who do have some retirement savings, the median balance is only $40,000, which falls far short of the estimated $1.5 million needed for a comfortable retirement. This shortfall in savings is exacerbated by the looming funding shortfall facing Social Security, which could result in a 20% cut to benefits starting in 2034 if not addressed by Congress.

While there have been efforts to improve the retirement savings system in recent years, many workers are still left out of the system, leading to significant challenges ahead. The lack of access to employer-sponsored retirement plans means that many Americans are not saving for retirement at all, according to the report.

The meager level of retirement savings also contributes to the increasing poverty rates among older Americans. The share of seniors living in poverty reached 15% in 2024, the highest rate among all age groups.

The report also highlights the fact that few workers are reaching retirement savings benchmarks. Workers aged 55 to 64 have only accumulated 19% of their targeted retirement savings in 401(k)s or similar plans, indicating a significant gap in savings for older workers.

Given the importance of Social Security in providing financial stability for seniors, it is crucial to address the program’s funding gap. Many Americans misunderstand Social Security’s role in retirement, with some overestimating or underestimating its importance. Shoring up the program to avoid insolvency is a pressing issue, with potential solutions including raising the payroll tax rate, increasing the retirement age, or lifting the current cap on earnings subject to the payroll tax.

Without a fix, the looming 20% reduction in benefits could have a significant impact on the lives of seniors and other beneficiaries. It is essential for policymakers to take action to ensure the financial security of future retirees in America.