Here are 7 scary stats that will make you ‘rethink’ retirement in America — know them now before you make your next big money move
Retirement should be a time when you get to relax and enjoy the fruits of your savings, but that may not be the case for many Americans.
According to Ramsey Solutions, some startling statistics suggest many Americans could be in for a tough time in their golden years. Preparing for retirement is essential, but these stats paint a scary picture that explains why many Americans aren’t preparing much at all.
If you’ve got your retirement top of mind and you don’t want to be included in this cohort, here are seven troubling retirement statistics that could scare you and your retirement savings into action.
In total, more than 90 million adults in the United States owe more to their credit card companies than the amount that they’ve saved for retirement. This is a huge problem, especially with credit card interest averaging 21.47% as of January 8, 2025.
Those with massive credit card debt who are paying these high rates have committed a lot of their current and future income to creditors, which of course makes it harder to save money for retirement. Americans saddled with heavy credit card debt also have compound interest working against them, as interest is added onto their balance and they end up paying interest on interest.
Credit cards are a handy financial tool, but racking up credit card debt can have a crippling effect on your ability to save for retirement.
Investing in the stock market is one of the best ways to prepare for retirement because your assets can earn higher returns than most other investments offer. The higher the returns, the harder your money works for you and the easier it is to build wealth.
Say, for example, you invest $500 a month for retirement every year for 30 years, putting the money into an S&P 500 index fund that has consistently earned a 10% average annual return (AAR) over many years. At the end of those 30 years, you’d have a nest egg worth $986,964.14.
But if you were to put $500 a month into a high-yield savings account earning an average of 2% AAR over 30 years (which would be pretty competitive over the long term), you’d have just $243,408.48.
As you can see, simply saving money is one way to prepare for retirement, but investing in the stock market has long-term potential that far surpasses what a savings account can do for you.
Among non-retirees, 66% say they feel like they are behind on achieving their retirement savings goals, according to Ramsey Solutions.
Sadly, many of these Americans appear to be correct. The average defined contribution account balance for Vanguard participants was just $134,128 in 2023, while the median balance was just $35,286. These kinds of savings are far too low for American retirees to live on.
And while these median and average balances span all age groups, when you look at the specifics, virtually every age group is behind where they should be. Among those aged 55 to 64, for example, the average balance is $244,750 while the median is $87,571.
People in this age range are nearing retirement, and a savings account with a balance of $87,571 would allow them to spend just $3,502.84 annually — if they employed a safe withdrawal rate of 4% per year. That, simply put, is not enough to retire comfortably.
With savings rates as low as they are, many Americans are likely hoping Social Security can fill the gap and provide the income they need to retire comfortably. But, unfortunately, these benefits are not going to provide as much money as some may think.
The Social Security Administration reports the average monthly benefit was just $1,976 as of January, 2025. This means the average American retiree brings home just $23,712 in Social Security benefits per year, which doesn’t exactly make for a very comfortable retirement.
The reason this average is so low is because Social Security was never meant to be the sole source of a retiree’s income. Social Security was designed to work with your savings — and a potential pension fund — to provide financial security. Without those other income sources, retiring seniors could be in trouble.
Preparing for retirement is hard without a target number, and close to half of all workers don’t have one. It’s critical to decide how big your nest egg should be so you can break that big goal down into small goals and track your progress.
There are different ways to set a savings goal, but the best option is to talk with a financial advisor who can provide personalized advice. However, for those who want a simple method for setting retirement goals, you can just assume you’ll need about 10 times your preretirement income saved by the time you call it a career.
One big reason why so many people are unable to set retirement savings goals is because they have no one to turn to for help.
When it comes to retirement, many important decisions — from how much to invest to which accounts to invest in — need to be made. Unless you feel comfortable researching these issues on your own, you should find a trusted financial advisor who can help with setting up a solid retirement plan.
Finally, the last troubling statistic suggests that nearly half of Americans simply don’t have any money to save. And when you spend nearly all of your money covering the daily necessities, it’s next to impossible to invest in your savings and prepare for your golden years.
Those living paycheck to paycheck should aim to make a detailed budget, slash fixed expenses as much as possible and find ways to work some savings into their monthly budget. Otherwise they’re likely to end up with their retirement looking very different than what they may have imagined.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
