A new study reveals that the median savings of 55-year-olds, who have about a decade left before traditional retirement age, is only $50,000. This figure falls far short of the recommended savings of eight times their salary, which for many would amount to $447,000 or more.
Limited preparedness
According to Prudential Financial’s 2024 Pulse of the American Retiree Survey, only 1 in 5 55-year-olds have saved the recommended amount for retirement. This lack of savings readiness is echoed in another study on Generation X’s retirement preparedness, where half of those surveyed expressed doubts about their ability to retire comfortably.
With inadequate savings, many 55-year-olds are turning to alternative plans for retirement. One-quarter of them plan to rely on financial support from family, while a significant number expect to need housing assistance in their old age. This reliance on family and other forms of support reflects the financial challenges this age group faces in preparing for retirement.
Realistic planning needed
David Blanchett, head of retirement research at Prudential, emphasizes the importance of realistic planning. Many workers may need to work beyond 65 to save enough for retirement, but this plan overlooks the fact that most people retire earlier than planned, often due to factors beyond their control such as layoffs or health issues.
Blanchett suggests several strategies for improving retirement readiness. Workers nearing retirement should consider part-time work or a change in career to supplement their income. Additionally, delaying Social Security benefits until age 70 can significantly increase monthly benefits, providing a more secure financial foundation in retirement.
As 55-year-olds face the reality of their retirement savings, it’s clear that many are unprepared for the financial demands of retirement. Planning for retirement should be based on realistic expectations and a willingness to make hard choices to secure a more comfortable future.