Many adults are struggling to save for retirement, and less than two-fifths feel that they are on track with their savings. While preparedness for retirement increases with age, concerns about inadequate savings are still common for those near retirement age. Additionally, many with self-directed retirement savings are not comfortable managing the investments.

Retirement Savings

Less than two-fifths of non-retired adults think their retirement savings plan is on track, whereas over two-fifths think it is not on track and about one-fifth are not sure. In fact, one-quarter of the non-retired indicate that they have no retirement savings or pension whatsoever.

Among those who do have retirement savings, a defined contribution plan, such as a 401(k) or 403(b) plan, is most common. Over half of non-retirees have money in this form (figure 34). These accounts are more than twice as frequent as traditional defined benefit pension plans, which are held by 26 percent of non-retirees.

Figure 34. Forms of retirement savings among non-retirees
Figure 34. Forms
of retirement savings among non-retirees
Accessible Version | Return to text

Note: Among non-retirees. Respondents can select multiple answers.

Older adults are more likely to have retirement savings and to view their savings as on track than younger adults. Nevertheless, even among non-retirees in their 50s and 60s, one in eight lacks any retirement savings and less than half think their retirement savings are on track (figure 35).

Additionally, retirement savings vary substantially by race and ethnicity. White non-retirees are 14 percentage points more likely than black non-retirees to have any retirement savings, and they are 18 percentage points more likely to view their retirement savings as on track (figure 36).46

Self-assessments of retirement preparedness vary with the amount of current savings and time remaining until retirement. Among young adults under age 30, people typically believe that their savings are on track if they have at least $10,000 set aside for retirement (figure 37). The amount of savings needed for a majority to think they are on track increases as people near retirement, rising to at least $100,000 of retirement savings among those age 40 and older. Approximately 9 in 10 people with at least $500,000 of retirement savings think that they are on track, regardless of their age.

Figure 37. Retirement savings are on track (by age and amount of savings for retirement)
Figure 37. Retirement
savings are on track (by age and amount of savings for retirement)
Accessible Version | Return to text

Note: Among non-retirees.

1 Respondents ages 18 to 29 with over $500,000 saved for retirement are excluded due to the small sample size.

Some people withdraw money from their retirement accounts early for purposes other than retirement, despite the fact that they may incur a substantial tax penalty. Overall, 5 percent of non-retirees have borrowed money from their retirement accounts in the past year, 4 percent have permanently withdrawn funds, and 1 percent have done both. Those who have withdrawn early are less likely to view their retirement savings as on track than those who have not--27 percent versus 39 percent (figure 38).

Financial Literacy and Comfort Investing

Among those with self-directed retirement savings, including 401(k)s, IRAs, and savings outside of formal retirement accounts, comfort in managing these investments is mixed. Three-fifths of non-retirees with these accounts have little or no comfort managing their investments.

On average, women of all education levels and less-educated men are less comfortable managing their retirement investments (figure 39). While 60 percent of men with at least a bachelor's degree are largely comfortable making these investment decisions, 41 percent of men with a high school degree or less are comfortable. Among women with any level of education, investment comfort is lower than among similarly educated men. Thirty-five percent of women with a bachelor's degree are comfortable managing their investments. Women's comfort with their investments also rises less with education than men's.

Expressed comfort in financial decisionmaking may or may not correlate with actual knowledge about how to do so. To assess actual financial literacy, respondents are asked five basic questions about finances (table 34).47 The average number of correct answers is 2.8 with one-fifth of adults getting all five correct.

Table 34. Financial literacy questions


Question Correct Incorrect Don't know or no answer
Housing prices in the United States can never go down? [True or False] 60 19 22
Buying a single company's stock usually provides a safer return than a stock mutual fund? [True or False] 46 4 50
Considering a long time period (for example, 10 or 20 years), which asset described below normally gives the highest returns? [ Stocks, Bonds, Savings accounts, Precious metals] 42 20 37
Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account? [More than today, Exactly the same, Less than today] 62 12 25
Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow? [ More than $102, Exactly $102, Less than $102] 71 12 16
Average score 56 13 31

Note: Correct answers provided in bold. "Don't know" includes individuals who did not provide an answer. For each question, less than 2 percent of respondents did not reply.

The average number of correct financial literacy questions is higher for those who are generally comfortable with managing their retirement accounts (3.5 questions) than those who have savings but limited comfort (2.9 questions) (table 35). Notably, the number of incorrect answers does not vary with investment comfort. Instead, the number of "don't know" responses falls as investment comfort rises.

Table 35. Financial literacy (by retirement savings and comfort investing)

Number of answers out of five

Investment comfort and presence of retirement savings Correct Incorrect Don't know
Has self-directed retirement savings 3.2 0.6 1.2
Mostly or very comfortable investing 3.5 0.6 0.8
Not or slightly comfortable investing 2.9 0.6 1.5
No self-directed retirement savings 2.4 0.7 1.8
Retired 3.0 0.6 1.4
Overall 2.8 0.7 1.5


Half of retirees in 2017 retired before age 62, and an additional one-fourth retired between the ages of 62 and 64.48 Average retirement ages differ by race and ethnicity, with black and Hispanic retirees more likely to have retired before age 62 (58 percent and 55 percent, respectively) than white retirees (48 percent).

In choosing when to retire, a desire to do other things than work or to spend time with family were the most common factors. In addition, two-fifths of retirements before age 62--and one-third between ages 62 and 64--involved poor health as a contributing factor. About one-fourth of those who retired before age 65 said the lack of available work contributed to their decision (table 36).

Table 36. Reasons for when to retire (by age retired)


Reason Don't
61 or earlier 62-65 65+
Wanted to do other things 48 56 62 61
Wanted to spend more time
with family
54 52 57 57
Poor health 63 39 31 27
Family responsibilities 52 33 33 30
Didn't like the work 32 30 28 26
Forced to retire or lack of available work 38 23 26 25

Note: Among retirees. Resondents can select multiple answers.

Among blacks and Hispanics who retired early, health concerns are a more common factor than among white early retirees (figure 40). Conversely, whites who retired early are more likely to have retired, at least in part, because they wanted to do other things than work.

For income in retirement, 86 percent of retirees in 2017 receive Social Security benefits (table 37). Fifty-six percent draw on a defined benefit pension, and 58 percent use savings from an IRA, 401(k), or other defined contribution plan. The types of retirement savings for current retirees differs substantially from non-retirees, for whom defined contribution plans are much more common than defined benefit pensions.

The sources of retirement income also differ by race and ethnicity. Black and Hispanic retirees are less likely than whites to have self-directed savings. In aggregate, 71 percent of black retirees and 66 percent of Hispanic retirees are drawing from at least some private retirement savings (other than employment during retirement and relying on family), compared to 86 percent of white retirees.

Table 37. Sources of funds in retirement (by race/ethnicity)


Source of funds White Black Hispanic Overall
Social Security 89 83 73 86
Defined benefit pension 58 57 48 56
Savings outside a retirement account 59 33 33 53
IRA or 401(k) 65 38 41 58
Income from real estate 15 11 13 14
My spouse/partner has a job 32 35 33 32
I have a job 9 14 12 10
Income from a business 5 2 7 5
Relying on children or other family 3 4 8 4
Other retirement savings 22 9 18 20

Note: Among retirees. Resondents can select multiple answers.


 46. Blacks and Hispanics are younger than whites, on average, which contributes to these racial and ethnic gaps. However, even within age cohorts, substantial differences remain in retirement savings. Return to text

 47. Three of these questions are the "big 3" financial literacy questions developed by Annamaria Lusardi and Olivia Mitchell (see "Financial Literacy around the World: An Overview," Journal of Pension Economics and Finance 10, no. 4 (2011): 497-508, Of just those three questions, people answered 60 percent of questions correctly, on average. Return to text

 48. This discussion of current retirees considers everyone who reports that they are currently retired, even if they also indicate that they still are working in some capacity. Sixteen percent of retirees indicate that they are still working--either for themselves or for someone else. Analysis of the ages retired excludes those who don't know. Return to text

Back to Top
Last Update: June 19, 2018