BAKERSFIELD, Calif. (KERO) — A new report reveals a stark reality: millions of American workers are heading toward retirement with dangerously low savings, raising serious concerns about financial security in their golden years.
The National Institute on Retirement Security found that American workers with retirement accounts, like 401(k)s, had a median balance of about $40,000 in 2022. However, when all workers are included in the calculation, that median drops dramatically to just $955.
"They think that social security will be enough to allow them to retire in the future, and unfortunately, that's not the case. With the increases in the age at which you start getting benefits and the decreases in the actual benefit amounts," said Richard Gearhart, professor of economics at California State University, Bakersfield.
Gearhart explained that rising retirement ages, lower benefit amounts, and stagnant wages are making it increasingly difficult for workers to save adequately. He said the average American would need to save $300 to $400 a month starting in their early 20s to have enough to retire by 65.
"As of now, you need about 1.5 million dollars saved by the time you're age 65 to not see a dip in your standards of living. Most Americans don't have the disposable income to be able to do that," Gearhart said.
The report also highlights the growing reliance on Social Security, which provides about half of the income for older adults. This dependency comes even as concerns mount about the program's long-term stability. Without Congressional action, benefits could be reduced after 2034.
"You're looking at retirement ages of 70, maybe 72 as the norm, and what social security might consider the age at which you start to get full retirement benefits," Gearhart said.
This isn't just a future problem. Gearhart said a lack of savings is already affecting Americans nearing retirement age. About 60% of Americans over 55 have no private retirement savings. Many will be forced to sell their homes just to afford retirement, if smaller or cheaper housing options even exist.
"A report just came out that said our national deficit will be close to 64 trillion dollars in ten years. We are rapidly heading toward an unsustainable future because we just don't have enough money. We're not taking in enough revenues," Gearhart said.
Gearhart warned that the retirement gap is widening across education and racial lines, with long-term consequences for health care access, housing stability, and economic inequality. Still, he said, there is something people can do right now.
"Start saving. Put away 100 bucks a month. It doesn't matter; you have to start with something. Be risky for investing when you're young. But, no matter what stage of life you are in, start contributing today," Gearhart said.
Gearhart added it's also important to plan for future health care costs, which can be three to five times higher in your 70s and 80s. He said staying healthy now, through diet and exercise, can help reduce financial strain later in life.
This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
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