6 in 10 Older Workers Don't Think They'll Have Enough Money in Retirement

Nearly two-thirds of older workers fear their Social Security benefits and 401(k) savings will end up being inadequate to support their retirement.

That's according to a recent New York Life survey on retirement readiness, which also found that Gen X workers — the oldest of whom will turn 60 next year — are particularly likely to say they're not financially prepared for retirement.

Only 18% of Gen Xers say they’ve already "successfully retired." And more concerningly, 70% of those in Gen X who are still working (or "pre-retirees") expect to either retire later than expected or not at all, according to the survey, which attributes the pessimism to worsening financial confidence and the gradual increase in longevity. The survey defines older workers and pre-retirees not by age but by how far away the respondent is from their desired retirement start date.

“The potential for people to live longer has implications for the workplace, retirement, and health planning,” Jessica Ruggles, corporate vice president of financial wellness at New York Life, said in a report, adding “the typical retirement preparation often happens too late.”

The lack of confidence about being able to afford retirement isn't for lack of trying: Americans are trying to save money but are struggling to put enough away.

A separate report from Fidelity last month showed that the average 401(k) balance among Gen X plan participants is about $182,100, while the overall average balance is $127,100. While these figures represent meaningful savings, they pale in comparison with how much money Americans expect to need for a comfortable retirement.

Others have yet to begin their retirement saving journeys. Among all pre-retirees, defined as people between 5 and 10 years out from when they want to retire, only 37% say they have retirement savings, according to New York Life. That could be an indication that many people think they can live off Social Security benefits, which average about $1,870 per month.

Financial planners strongly discourage this mindset as your benefits likely won't amount to anything near your working income.

How to catch up on retirement savings

If you're an older worker and lack adequate retirement savings, now is the time to get serious about the issue. Saving for retirement at a young age is typically much easier because your investments have time to grow and compound over decades — a luxury you don't have if you're near retirement. But there are still several things you can do to improve your financial footing later on.

Figuring out how much money you'll likely need in retirement is a key first step to getting on the right track.

People often underestimate how long they'll live as well as how much they'll spend per year in retirement. For example, Americans aren't taking into account the high chances they will need long-term care, which can be a major drain on retirement savings, according to New York Life. In retirement planning, it's better to overestimate than underestimate your savings goal.

Next, make sure you're taking full advantage of your employer's 401(k) match, and try to increase how much you're contributing each month. To help, workers who are 50 and older can make "catch-up" contributions (up to $7,500 in 2024) on top of the $23,000 maximum contribution. If you can't afford a substantial bump right away, incrementally increasing bumping up your savings rate over time is still effective at an older age, experts say.

If you don't have a workplace retirement plan, you should be saving in an individual retirement account (IRA). These also have catch-up contributions on top of the $7,000 annual cap, though the limit is lower at $1,000. (Saving in an IRA is also a smart strategy for workers who are already getting their full company match in their workplace 401(k) and are able to put more money away.)

Budgeting is going to be critical to achieving your goals. Saving money is obviously challenging, even for older workers farther along in their careers. But simple lifestyle changes and adjustments like cutting back on online shopping, travel and dining can help you move the needle. For bigger changes, look for budget lines that may shift in the coming years and could be sources for catch-up contributions. Could you drive a paid-off car for a few more years and divert money you would spend on an auto loan into a retirement account? Or maybe you have older children who are moving out and can start paying for their cell phone plan, car insurance and more.

Above all else, you need to have a plan. As the researchers point out in the report, among people who successfully retired, two-thirds reported they were able to save enough to do so because they had a financial strategy to follow.

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