3 Real Reasons Middle-Class Americans Aren’t Saving for Retirement in 2025
Written by
Gabrielle Olya
Edited by
Amen Oyiboke
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Nearly 1 in 4 middle-class Americans haven’t saved a dime for retirement, and the reasons why reveal deeper financial stress.
A recent TruStage survey of Americans with a household income of $55,000 to $160,000 found that 22% have not started saving for their golden years — and they cite three major obstacles as the reasons why middle-class Americans are not saving.
Low Income Is Blocking Retirement Savings
Almost half (45%) of middle-class Americans said that they do not make enough money to save for retirement. While saving for retirement on a limited income can be challenging, Terrance Williams, CEO at TruStage, offered a few tips for anyone in this situation:
- Start small: “Modest contributions can grow over time,” he said. “By automating monthly deposits — even $25 or $50 — into a retirement account, consumers can build momentum and habit without breaking the bank.”
- Take advantage of employer-sponsored plans: “While not always available, 401(k) plans with employer-matching can be a powerful tool,” he said. “Those who don’t contribute enough to get the full match are essentially leaving free money on the table.”
- Consider annuities: “Annuities, especially Registered Index-Linked Annuities (RILAs), are flexible, risk-protected vehicles for retirement planning,” he said. “These can be tailored to middle-income needs and offer downside protection in volatile markets.”
- Seek financial guidance: “Credit unions and community-based advisors may offer free or low-cost guidance tailored to middle-income households,” Williams said.
Urgent Expenses Are Derailing Long-Term Savings
Some middle-class Americans who aren’t saving for the long-term said it’s because they have more urgent financial needs — 27% said they are prioritizing paying for things like emergency medical needs and student loans instead.
“Ultimately, balancing urgent financial needs with retirement planning requires a mindset shift — viewing retirement not as a distant milestone, but as a series of small, manageable steps that begin today,” Williams said.
He recommends a tactical approach to finances that addresses immediate needs while still building toward future goals:
- Opt in to employer-sponsored plans, when available, with matching contributions, or use flexible vehicles like Registered Index-Linked Annuities (RILAs) that provide downside protection for those with fluctuating income.
- Establish a modest emergency fund to buffer against unexpected expenses without derailing long-term plans.
- Consider when you need a safety net, like debt protection on a large loan, so one unexpected life event doesn’t derail your long-term financial outlook.
- Leverage digital tools like budgeting apps or retirement calculators to track spending, identify savings opportunities and recalibrate contribution plans should an unexpected life event occur.
If you do need to pause retirement contributions, whether due to job changes, caregiving costs or economic pressure, take steps to catch up and fill the savings gap. Williams recommends the following:
- Use IRS catch-up contributions: “Designed specifically for people who’ve had gaps in saving, starting at age 50, individuals can make additional contributions to retirement accounts,” he said.
- Increase contributions during high-income years: “If income increases, redirect those gains into retirement accounts,” he said. “Increase retirement contributions after a promotion instead of living on an inflated budget. Even shorter bursts of higher contributions can ease the pressure and provide a path to recovery.”
- Consider Roth conversions: “If income is temporarily lower, converting traditional IRA funds to Roth IRAs can reduce future tax burdens and allow for tax-free growth.”
They’re Delaying Retirement Planning
Among middle-class Americans who aren’t saving for retirement, 27% said it’s because they don’t plan to retire for many years. However, it’s best to start saving for retirement as soon as possible.
“The ideal age to start saving for retirement is in your 20s or as soon as you begin earning income,” Williams said. “By adopting a ‘low and slow’ approach, consumers can take full advantage of compound interest, where savings will grow exponentially over time.”
For example, if you start saving $100 per month at age 25, your savings can grow to more than $150,000 by age 65, assuming a standard 5% annual return. Your savings can be even greater if you take advantage of employer matching programs.
“Waiting until age 35 to start saving cuts that total nearly in half,” Williams said. “By prioritizing early saving, consumers can better prepare for unexpected life events and have more flexibility in career choices, family planning and health-related decisions.”
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