Will Americans Be Living the Dream—or a Nightmare—in Retirement?

Rising inflation and market volatility are dampening Americans’ confidence in their ability to save for retirement. According to a survey by Schroders, working Americans aged 45 and older expect to need $1.1 million in savings to retire comfortably. However, fewer than half believe they will be able to save $500,000 or more, and 36 percent expect to save less than $250,000.

Confidence in their savings has also tumbled among Americans nearing retirement, with only 22 percent of those aged 60-67 saying they have enough saved, compared with 26 percent a year ago. Nearly two-thirds of this age group expect to have less than $500,000 saved when they retire, including 54 percent who expect to have less than $250,000 saved. 

Compounding this financial concern is a trend of increasing expenses, which nearly half of retirees indicate are higher than they expected. Sixty-nine percent of working Americans indicated they plan to continue working in their retirement years, with more than half of those saying they will need to do so to pay for basic living expenses. 

While 37 percent of retirees describe their retirement as comfortable, 18 percent are struggling, and 5 percent say they are living a nightmare. Only 3 percent describe their retirement as “living the dream.” 

The firm surveyed 1,000 U.S. investors nationwide to discover the state of retirement readiness and planning, key concerns about retirement, and current sentiment among retirees. The survey found that Americans are concerned about inflation decreasing the value of their assets, higher-than-expected healthcare costs, and the potential for a major market downturn.

“These are seriously challenging times, and they seem to be taking a toll on the American worker and their belief about achieving a comfortable retirement,” says Joel Schiffman, head of intermediary distribution for North America at Schroders. “This year, inflation is the number-one concern Americans have about their retirement, and next year, it may be something else.”

Schiffman emphasized the need for Americans to remain focused on retirement goals regardless of the challenges that present themselves. However, only 23 percent of respondents said they have a written retirement plan to help guide their decisions. About 40 percent have done some planning but don’t have a formal plan, and 37 percent have done no planning at all. Respondents reported feeling overwhelmed by the idea of planning, and more than half think life is too uncertain to make a plan.

Of those who have gone through with retirement planning, nearly all said it was useful and a third said it was crucial in putting them on a better path for retirement.

Kristen Beckman is a freelance writer based in Colorado. She previously was a writer and editor for ALM’s Retirement Advisor magazine and LifeHealthPro online channel. She also was a reporter for Business Insurance magazine covering workers compensation topics.