Many adults are struggling to save for retirement and feel that they are not on track with their savings. While preparedness for retirement increases with age, concerns about inadequate savings are still common for those near retirement age. Current retirees are, on average, managing somewhat better financially than non-retirees, but economic well-being in retirement varies substantially with the reason for retirement.

Retirement Savings

Because retirement saving strategies differ by circumstances and age, survey respondents are asked to assess whether or not they feel that they are on track, however they define that for themselves. Thirty-six percent of non-retired adults think their retirement saving is on track, 44 percent say it is not on track, and the rest are not sure.

The amount currently saved for retirement is another way to assess preparedness. One-quarter of the non-retired indicate that they have no retirement savings or pension whatsoever. Of the non-retired age 60 and older, 13 percent have no retirement savings or pension.

Among those non-retirees who do have retirement savings, a "defined contribution" plan, such as a 401(k) or 403(b) plan, is the most common type. Fifty-four percent of non-retirees have money in this form (figure 32). These accounts are more than twice as frequent as traditional "defined benefit" plans, such as a pension, which are held by 22 percent of non-retirees.

Figure 32. Forms of retirement savings among non-retirees
Figure 32. Forms of retirement
savings among non−retirees
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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 60s, 13 percent do not have any retirement savings and 45 percent think their retirement savings are on track (figure 33).

Figure 33. Lack of retirement savings and self-assessed preparedness (by age)
Figure 33. Lack of retirement
savings and self-assessed preparedness (by age)
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Note: Among non-retirees.

Additionally, retirement savings differ by race and ethnicity. Blacks and Hispanics are more likely than whites to have no retirement savings, and are less likely to view their retirement savings as on track (figure 34). This partly reflects the fact that blacks and Hispanics are, on average, younger than whites; however, even within age cohorts, significant differences remain in retirement savings by race and ethnicity.

Figure 34. Lack of retirement savings and self-assessed preparedness (by race/ethnicity)
Figure 34. Lack of retirement
savings and self-assessed preparedness (by race/ethnicity)
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Note: Among non-retirees.

Self-assessments of retirement preparedness vary with the amount of current savings and with time remaining until retirement. Young adults under age 30 typically believe that their savings are on track if they have at least $10,000 set aside for retirement (table 27).27 The amount of retirement savings required for most to report being on track increases with age. Adults ages 45 to 59 who say their retirement savings are on track typically have at least $250,000 saved.

Table 27. Retirement savings in self-directed accounts are on track (by age)
Category 18–29 30–44 45–59
Amount seen as on track by majority $10,000 or more $100,000 or more $250,000 or more
Percent with on track amount saved 22 22 27

Note: Among non-retirees. Value of any defined benefit pensions, real estate, or business not included in the retirement savings amounts.

Just over 2 in 10 non-retirees under age 45 have retirement savings that meet their age-specific "on track" thresholds. The fraction rises with age to 27 percent of adults ages 45 to 59. The threshold for most to view savings as on track rises more rapidly with age than the fraction reaching that level of retirement savings.

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 prior 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 37 percent.

Investment Decisions and Financial Literacy

Those with self-directed retirement savings (nearly 7 in 10 non-retired adults) have to make decisions about how the money is invested. The level of comfort in managing these investments varies. Six in 10 non-retirees with these accounts expressed low levels of comfort in making investment decisions with their retirement accounts.

On average, women of all education levels, and less-educated men, are less comfortable managing their retirement investments (figure 35). While 58 percent of men with at least a bachelor's degree are mostly or very comfortable making these investment decisions, 38 percent of men with a high school degree or less are that comfortable. Women with any level of education are less comfortable making investment decisions than men. Thirty-two percent of women with a bachelor's degree are comfortable managing their investments. Women's comfort with investing does rise with additional educational attainment, but this increase is markedly more muted than is the case with men.

Figure 35. Mostly or very comfortable investing self-directed retirement savings (by gender and education)
Figure 35. Mostly or very comfortable
investing self-directed retirement savings (by gender and education)
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Note: Among non-retirees with a self-directed retirement account.

Self-assessed comfort in financial decisionmaking may or may not correlate with actual knowledge about how to do so. To get some sense of individuals' financial acumen, respondents are asked five questions commonly used as measures of financial literacy (table 28).28 The average number of correct answers is 2.8, and 22 percent of adults get all five correct.

Table 28. Financial literacy questions


Question Correct Incorrect Don't know
Housing prices in the United States can never go down. (False) 61 17 22
Buying a single company's stock usually provides a safer return than a stock mutual fund. (False) 47 3 49
Considering a long time period (for example, 10 or 20 years), which asset described below normally gives the highest returns? (Stocks) 42 18 39
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? (Less than today) 59 12 27
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) 70 11 18
Overall 56 12 31

Note: Correct answers provided in parentheses. For each question, less than 2 percent of respondents did not reply.

Using these measures, it appears that those expressing more comfort managing their retirement accounts also demonstrate more financial knowledge. Among those who have self-directed retirement accounts, those who express decisionmaking comfort answer more questions (3.7 out of 5) correctly, on average, than those who express little or no comfort (2.9 out of 5) (table 29).

Table 29. 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 0.5 1.2
Mostly or very comfortable investing 3.7 0.5 0.8
Not or slightly comfortable investing 2.9 0.6 1.5
No self-directed retirement savings 1.8 0.7 2.5
Retired 2.9 0.7 1.5
Overall 2.8 0.6 1.6

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. Overall, however, non-retirees with such accounts still answer more financial literacy questions correctly, on average, than either non-retirees who do not have such accounts or people who are already retired.

Gender differences in financial literacy mirror differences in being comfortable with the investment decisions. Women, on average, answer fewer financial literacy questions correctly (2.5) than men (3.1). Women are also more likely to select "don't know" (1.9) than men (1.3). As a result, women, on average, express less comfort making retirement investment decisions and exhibit somewhat lower levels of financial literacy. Some evidence suggests that one driver of this gender difference may relate to different levels of experience with financial decisions.29

Well-Being in Retirement

Over one-quarter of adults consider themselves to be retired. This report's discussion of current retirees includes everyone who considers themselves to be retired, even though some also report that they are still working in some capacity. Seventeen percent of retirees (5 percent of all adults) say that they had done some work for pay or profit in the prior month. Retirees are somewhat more likely to report that they are at least doing okay financially (78 percent) than non-retirees (74 percent). Retirees who are still working report even higher levels of well-being.

Nearly half of retirees in 2018 retired before age 62, and one-fourth retired between the ages of 62 and 64.30 Average retirement ages differ by race and ethnicity, with black and Hispanic retirees more likely to have retired before age 62 (61 percent and 55 percent, respectively) than white retirees (45 percent). Overall, early retirees report similar levels of economic well-being as later retirees.

In deciding when to retire, a desire to do other things than work, or to spend time with family, are the most common factors. In addition, 4 in 10 retirees before age 62—and 3 in 10 between ages 62 and 64—say poor health contributed to their retirement. More than one-fifth of those who retired before age 65 say the lack of available work contributed to their decision (table 30).

Economic well-being varies considerably by the reasons for retirement. Nine in 10 retirees who say doing something else was very important in their retirement decision are at least doing okay financially, versus more than half of those who retired due to poor health.

Table 30. Reasons for when to retire (by age retired)


Reason Don't
61 or earlier 62–64 65+
Wanted to do other things 47 55 56 58
Wanted to spend more time
with family
50 51 53 55
Poor health 57 40 31 27
Family responsibilities 44 32 31 25
Didn't like the work 30 30 24 21
Forced to retire or lack of available work 35 21 24 18

Note: Among retirees. Respondents can select multiple answers.

Among blacks and Hispanics who retired early (before age 65), health concerns are a more common factor than among white early retirees (figure 36). Conversely, whites who retired early are more likely to have retired, at least in part, because they wanted to do other things than work.

Figure 36. Reasons for early retirement (by race/ethnicity)
Figure 36. Reasons for early
retirement (by race/ethnicity)
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Note: Among retirees who retired before age 65.




 27. These results only refer to non-retired adults with retirement savings in self-directed accounts, including 401(k)s, IRAs, and savings outside of retirement accounts. Return to text

 28. Three of these questions were 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) and have been widely used to study financial literacy. Return to text

 29. Some of the gender gap in financial literacy might be due to specialization in financial tasks within a household, with women being less likely to handle the finances. Joanne W. Hsu finds that women's financial literacy increases after the death of a spouse (see "Aging and Strategic Learning: The Impact of Spousal Incentives on Financial Literacy," Journal of Human Resources 51, no. 4 (Fall 2016): 1036–67). Return to text

 30. The tabulations of retirement ages exclude the 14 percent of retirees who do not know the age at which they retired. Return to text

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Last Update: June 14, 2022