How Many People Are Actually Never Able To Retire? Here’s What Experts Say
Written by
Sean Bryant
Edited by
Molly Sullivan
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With the cost of living skyrocketing across the United States, many Americans are realizing their retirement plans need reconsidering. Those getting close to retirement age might be working longer than they had planned. While others are starting to wonder if they will ever be able to retire.
A recent GOBankingRates study found that nearly one-third of respondents never plan to retire. But how many Americans will never actually be able to retire? Keep reading as we explore this question, look at how much money you should have to retire comfortably and discuss some ways to get back on track so retirement can once again feel like a realistic goal.
Why Are People Not Able To Retire?
Many different things can affect people’s perception about being able to retire. Things like inflation, stagnant and low wages, high cost of living, economic recessions and a volatile stock market are all external factors that people don’t have control over. These things can make it very difficult for some people to ever be in a financial position to retire.
However, there are also factors that we’re in complete control of. Things like spending more than you make, making poor financial choices and not being proactive about receiving pay increases throughout your career. These things can also affect your retirement outlook. And while not all these issues will affect everyone, they are good things to be mindful about.
But a question that should be asked is, are these issues going to be a roadblock for retirement or are they just making people feel like they’ll never be able to retire?
“News articles discussing American’s preparedness for retirement are often surveys, meaning not proof they will never be able to retire, only their feelings toward the future,” said Brian Kuhn CFP®, SVP financial advisor at Wealth Enhancement Group. “One method to analyze what percentage of older Americans work into old age would be the Bureau of Labor Statistics, which extensively researches the population. We can see from recent 2023 data that there are 24,067,000 individuals over 75, and only 1,930,000 are working, representing 8%.”
Kuhn went on to say that somehow 92% of those 75 and older have managed to find a way to live without needing to work. Plus, the data doesn’t show how many of the 1.93 million people are working because they enjoy working and not because it’s a financial requirement.
How Much Do You Need To Retire?
To determine if you’ll be able to retire, you must first know how much money you will need to be comfortable. While there is no clear-cut answer for this, some experts say you should have accumulated three times your current income for retirement by age 40. Then you should have accumulated 10 to 12 times your income by the time you want to retire. This should be enough to replace at least 60% of your pre-retirement annual income.
How To Get Retirement Savings Back on Track
If your retirement savings is not where it should be, there are a few things you could do to get it back on track.
Find Ways To Contribute More
Contributing more to your retirement accounts is the most logical way to increase your account balance. If you receive a raise at work, use the extra money to increase your 401(k) or IRA contributions. If your income hasn’t increased and you’re working with the same budget, try increasing the amount you contribute gradually every few months.
Take Advantage of Your Employer’s Full 401(k) Match
One of the perks that many employers offer is a company match to 401(k) plans. The amount of match can fluctuate from one employer to the next, but typically, they will match employee contributions up to a certain percentage. If your employer offers a 401(k) match, you should take full advantage if you are not already doing so. This is essentially free money that you shouldn’t leave on the table.
Take Advantage of Catch-Up Contributions
Catch-up contributions allow those ages 50 and older to save additional money each year for retirement on a tax-advantaged basis. The additional saving allows those behind in their retirement savings to “catch up.” The contribution limits vary based on the retirement account type, but for 2024 the catch-up for a 401(k) is $7,500, and for an IRA, it’s $7,000.
The Bottom Line
Inflation has caused nearly everything to cost more over recent years, affecting how many people think about their retirement. Some are wondering if they can ever retire and still feel financially comfortable. If you fall into this group, a little bit of planning can help you get back on track and feel more confident you’ll be able to enjoy your golden years.
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