11 Seriously Alarming Retirement Stats That Should Concern You

Retirement is meant to be a time of great relaxation and fun. Your later years can be a tremendous time to be alive if you plan accordingly — but the planning phase that comes before can feel long and daunting. When leaving the workforce, you'll need to have a solid buildup of financial support in order to replace the income left behind. This transition can come with more than a few growing pains, but many of the difficulties of heading into retirement are the fruit of a plan suffering from holes.

Both in retirement and leading up to it, there are quite a few signals to look out for. These can give savers and retirees alike a better glimpse of how they are progressing toward their financial goals and how the economy might impact those idealized outcomes. Unfortunately for those without a steely resolve, these indicators often come in the form of a concerning financial statistic. However, these stats are for the faint of heart — by evaluating where you stand, you can take stock of your own retirement planning or consider changes that might improve your life if you're already in retirement.

A reading of emergency savings habits might not sound like it has anything to do with retirement on the surface. An emergency fund is meant to support financial hardship in the here and now, while retirement savings are to be leveraged long into the future, right? These are truths, but they gloss over the importance of total financial health as it relates to every financial goal you might have for yourself and your future. Without the ability to weather a storm in the present, it can be extremely difficult to consistently save for retirement, or any other longer-term goal.

A lack of emergency cash to cover sudden expenses, repairs, or medical requirements is a surefire way to experience an interrupted contribution schedule to your retirement accounts. Without consistent saving strategies for the future in place, it can be incredibly difficult to hit your goals. The trouble only becomes more pronounced with age, with the power of compounding interest drying up with each passing year that you don't take advantage of its weight. They may seem like separate financial features, but the truth is that you'll need to get serious about your emergency savings if you want to actively build your retirement fund.

Many savers put their faith in pension plans or financial advisors who manage their assets for them. This is a perfectly good approach to retirement investing, especially for those who aren't well-versed in the ebbs and flows of the stock market (or other commodity spaces). Professional help is often a great asset to have in your corner, but it's not enough to put blind trust into these individuals or systems.

According to a Schroders survey, more than a quarter of those falling back on outside plan opportunities don't know how their money is allocated, making for a totally blind approach to retirement savings. It might not sound like a big deal, since the management of your funding is being taken care of, but looking a little closer, it becomes obvious why this is a problem. In the same way that driving around an unfamiliar community without a map leads to great confusion and quite a bit of time spent lost along the way, saving for retirement with no understanding of what your funding is doing simply won't bring you to your goal with any real consistency. It's impossible to check in on assets or make sense of how the overall portfolio is doing in relation to your interim goals if you don't know what's in your savings accounts. Even with professional assistance, it's crucial to play an active role in the savings strategy.

Perhaps one of the most surprising — and dour — figures regarding retirement planning and spending is how retirees fare when working out their budget. Almost half of retirees note that their expenses are higher than expected, based on Schroders' reporting. For those saving today, this means that a significant slice of people aren't accurately judging the cost of their future retirement. That's a massive problem, especially if you happen to be one of them.

As is the case with any budgetary math, honesty and flexibility are crucial to managing weekly, monthly, or yearly finances. If you make guesses about your expenses and underestimate their costs, you may ultimately find yourself in a bit of a squeeze when it comes time to make everything work. The problem with underestimating expenses in retirement is that additional income and general flexibility can be harder to come by. The turkey is cooked, so to speak, when you leave the workforce and start drawing down on your retirement accounts. It's absolutely possible to tighten your belt and spend less, but without the promise of continual paychecks from your place of work, this tightening doesn't have any kind of definitive end date and may become your typical financial picture. What this means for savers today is that expenses perhaps should be overestimated when building an understanding of what it will take financially to retire.

Retirement accounts are all about volume versus drawdown. One of Dave Ramsey's worst pieces of financial advice focuses on drawdown, with his ideal figure coming in at twice the drawdown rate that many others in the industry advise (8% versus 4%). Your drawdown rate is the pace at which you withdraw funding from your retirement accounts, measured over the course of a year. Pulling money out is necessary to pay for quality of life features and typical expenses (both your vacations and your monthly cell phone bill). But, the faster you withdraw your money the faster it will dry up. Importantly, taking money out is an exponential change much like putting money in, this is why you won't want to draw your account down faster than it grows.

These features make the median savings figure that those nearing retirement have attained a serious concern. $185,000 is a great hill to have climbed (via U.S. Federal Reserve data), but when drawing the money out to pay for your routine expenses you'll find that it doesn't go all that far. At a 4% drawdown rate, you'll only see $7,400 a year ($617 per month) coming into your checking account. Going with Ramsey's figure, the total cash available is still dismal, rising to $14,800 (about $1,230 per month). Augmented by Social Security and pension contributions, this might be just fine, but it's not likely to be enough for a fulfilling lifestyle on its own.

Full retirement age is 67 for those born in 1960 or later, with early and late draws coming with bonuses or penalties. At 70, you'll be entitled to a 124% payout, and taking Social Security checks at 62 will yield a 70% payout. Some people nearing their exit from the workforce might consider drawing their Social Security checks early, while still working. The Social Security Administration has a few important rules governing benefit payouts in this case, but there's no issue in working and taking retirement benefits at the same time.

It's difficult to pin down any kind of generalized advice on when to start taking your Social Security benefits, but the longer you wait the more you'll be entitled to. What is obvious, though, is the fact that such a large volume of those closing in on 67 plan to take their benefits before they reach fruition (or rise above the 100% mark). With 40% of respondents to a CNBC survey suggesting they'll start taking benefits between 62 and 65, there's something going on that's worth exploring. Rigidity is the enemy of retirement planning, and you might find that an early draw might actually prove to be more than enough when factored in with other savings. The earlier you can leave the workforce the more time you'll have to enjoy retirement, but early withdrawal may also signal a desperation among those nearing their office curtain call.

In Schroders' 2024 retirement survey, a major figure that stands out centers on regrets over planning. 63% of retirees report wishing they had done more to plan for retirement before launching this next phase of their lives. This may be a result of underestimating the amount required to fund a fulfilling retirement, or it could simply be an issue of growing pains related to tax ramifications on withdrawn funds. Avoiding a substantial tax bill through intelligent drawdown and asset sale planning is a major component in solid retirement funding management.

However, the primary worry that descends over retirees appears to be centered on making existing funds go the distance. A lack of long term vision in the years and decades leading to retirement is certainly the culprit when exploring these worries and wishes. Those already in retirement may benefit from a conversation with an investment professional who can guide them toward a more enviable blend of growth and income-producing assets for increased utility in the years ahead. For a person still in the workforce, taking this piece of 20-20 hindsight onboard can help prevent a future characterized by the same wish for better planning when the time was still there to be utilized.

Caring for an elderly parent is a task that many Americans busy themselves with (ranging between 11.5% and 17% of adults, depending on the survey. There's something wholesome and truly good in the concept of caring for the people you love the most (and who cared for you before), but stepping up to the plate to handle this need doesn't come without consequences. The financial toll of caring for a parent or any other loved one who can't manage their own daily needs can be staggering. AARP reports that Americans collectively delivered the equivalent of $600 billion in unpaid caregiving services in 2021, as a direct example.

The total "cost" of caregiving can be felt in many ways. Providing care for a loved one who can't manage their own daily needs takes people away from other tasks. For some, a reduction in work hours acts as the trade, shrinking their budget. Others might burn the candle at both ends, working and providing care without stopping to take any time for themselves. Downtime is just as important as work hours for a healthy and functional employee and saver, so this can create detrimental burnout effects that also harm people hoping to save for their own later years. In the present, there's also a financial toll that comes directly to a caregiver's wallet. Many carers bring their parent into their own home, increasing the utility usage, food budget, and much more.

Surveys of the American public repeatedly raise alarm bells when it comes to savings profiles and long term mobility. Payroll.org's 2023 "Getting Paid in America" survey found that 78% of Americans live paycheck to paycheck, up from 72% the year before. CNBC came back with a figure of 65% in 2024. Regardless of the survey format or year covered, the high rate of incidence makes for a particularly alarming figure, especially when it comes to the world of retirement planning. Budgetary stress — or the threat of it, for those who consistently manage their finances successfully but nevertheless find themselves in this situation — makes a full-throated effort at retirement saving difficult, at best.

If you're constantly working to stay afloat rather than managing your financial demands from out in front, it's difficult, if not impossible, to commit to significant retirement contributions. Fear of a surprise expense, downturn at work, or any other kind of financial curveball makes holding onto liquid assets more important in the short term, reducing the amount you can reliably contribute to your long-term financial plans. An emergency savings fund helps alleviate this pressure, and alternative repayment strategies on recurring bills like a hefty credit card balance can also be of service. A balance transfer or consolidation loan might be a solid option for streamlining repayment, while additional cash savings built up gradually puts a bit of distance between your daily cash balance and an empty tank.

In its 2024 US Retirement Survey, Schroders notes three telling statistics. Less than 44% of Americans in retirement believe they've saved enough, and 32% of retirees think they definitively haven't. Another 24% of retired Americans are unsure of how their retirement assets will stack up against their drawdown demands. From any angle, these figures are fairly unsettling. A sizeable volume of retired Americans — those who have already left the workforce and therefore must rely on their saved assets or be forced to rejoin the working population — aren't confident in the product of their savings strategy at a time when they need it the most. Less than half believe they've successfully set aside enough money, and that's without taking into account the chronic underestimation of retirement costs taking place.

This is yet another figure that should light a fire under those currently working toward their retirement goals. Making the most of the years ahead is a crucially important task. This requires both a solid plan to contribute to retirement assets, and a quality set of tools to help grow this funding. 401(k) accounts, a Roth IRA, and pension funds are all good options, a traditional savings account or the like being not quite as valuable.

Both CNBC and Investopedia reported in 2023 that Social Security insolvency is a major concern for Americans over 50. 75% of those 50 and over worry that Social Security benefits will cease during their lifetime. Concern over the Social Security program has simmered for years. The Washington Post reports that while 100% coverage for the Old-Age and Survivors Insurance (OASI) program is slated to remain fulfilled through 2033 (without federal legislative intervention to increase funding), the program wouldn't simply disappear. 

Rather, the real concern is whether or not Social Security benefits have enough juice to give retirees what they need. For one thing, full retirement age is a legislated number, and could be shifted out further once again, forcing Americans to further delay taking the benefits they paid into while working. This has been justified in past action because of elongating life expectancy. But this doesn't take into account the drop in life expectancy that occurred in 2021 (77.0 to 76.1 years), according to the CDC. Harvard's School of Public Health noted in April 2023 that this figure is still depressed, coming in at 76.4 years at that time. Equally important, if financial weight is reduced over time in the OASI program, the value of a "full benefit" might be curtailed from the 100% mark down to something notably lower as the "standard." For its part, The Post notes that without any intervention, the program projects itself functioning at 79%.

Regardless of how adept your retirement plan is, it's firmly incapable of fully appreciating changes in the Consumer Price Index (CPI; from the U.S. Bureau of Labor Statistics). Inflation is a glacial and continual feature of marketplaces, rather than an exception, but it's still immensely difficult to predict how events in the real world that surrounds us will affect consumer prices on everything from milk and butter to cars and clothing.

The pandemic changed pricing tremendously over the course of a few years. It might be tempting to think that financial strain resulting from perhaps the worst public health crisis in a century (dating back to the Spanish Influenza pandemic) is a flash in the pan rather than a feature in the economic landscape, but the truth is that all manner of issues can send prices skyrocketing and retirement savings tumbling. Older Millennials have lived through at least 10 unique stock market crashes (a figure greater than the seven U.S. presidents who have held office during that time). All this leads to one inevitable conclusion: Retirement planning cannot wait, and it must be taken seriously. Starting when you first enter the workforce is the best course of action, but no matter when you begin saving, it's crucial that you understand how impactful every dollar can be. Overestimate your budgetary needs, and make it your business to understand where and how your money is working for your future.