A large share of Americans worry about their nest eggs.
CNBC's International Your Money Financial Security Survey polled about 500 people each in nine countries. Of the 498 people surveyed in the U.S., more than half (53%) said they're behind schedule in retirement planning and savings. The poll was conducted by SurveyMonkey.
“I think most Americans do struggle to save enough for retirement,” said David Blanchett, a certified financial planner and head of retirement research for PGIM, a money manager.
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For many families, money held in individual retirement accounts and 401(k)-type plans are a “key determinant” of future retirement security, according the according to the U.S. Federal Reserve's Survey of Consumer Finances.
Just 54% of Americans had a retirement account as of 2022, according to the SCF, which is published every three years. Their typical balance was $87,000, as measured by the median value.
The picture isn't much different for those who are on the precipice of retirement. To that point, the typical 55- to 64-year-old had saved just $71,000 in a 401(k)-type plan as of 2022, according to Vanguard Group data.
“Most Americans are going to need to save for retirement,” Blanchett said. “Yes, you can live off Social Security. But that's probably not going to replace your pre-retirement standard of living.”
Households shoulder competing financial choices
Ample competing financial priorities can make it challenging to save for old age.
Sometimes, especially for lower earners, there's a choice between survival today and ensuring for a good standard of living in the future, Blanchett said.
In 2022, households in the bottom 25% by wealth had a $3,500 median net worth, according to the SCF. By comparison, the top 10% had a $3.8 million net worth.
Households across income and wealth spectrums may simultaneously be trying to set aside money for financial emergencies, college savings, and buying a car or home, for example.
High inflation during the pandemic era has led prices for everyday goods and services to rise quickly. The average worker's buying power declined for two years, from April 2021 to April 2023, as average wage growth didn't keep pace with inflation. (That trend has since reversed as inflation has receded.)
Credit-card debt is at all-time highs, suggesting Americans have leaned more on credit cards to pay their bills.
“It's hard to save for retirement when you're not able to pay your rent,” Blanchett said.
Households shoulder more responsibility to save for their futures as employers have shifted away from pensions toward 401(k) plans.
Three in four (74%) of U.S. adults polled by CNBC expect to rely on government support in retirement, but only 42% of respondents are confident in the government's ability to support them.
Social Security benefits are funded via payroll taxes and assets held in a federal trust fund. However, demographic trends have stressed that trust fund. It's set to be depleted in 2033, at which point about 77% of promised benefits would be payable.
Congress is likely to intervene and the current benefit formula is unlikely to change for current and near retirees, experts said.
Access to 401(k)-type plans is a chief shortfall
Globally, Americans seem to trail residents of other nations when it comes to sentiment around retirement preparedness, the CNBC survey found.
CNBC polled residents from Australia, France, Germany, Mexico, Singapore, Spain, Switzerland and the United Kingdom, in addition to the U.S.
About 74% of respondents in France, 70% in Singapore and 65% in Mexico report being on schedule for retirement planning and savings, for example, the poll found. About 59% of respondents in Switzerland, 58% in Spain, 56% in the UK, 51% in Germany and 50% in Australia did so — all higher than the 47% among U.S. respondents.
Among the chief shortfalls of the U.S. retirement system is access to a workplace retirement plan, experts said. About half of workers don't have access and are unlikely to save for retirement outside a 401(k)-type plan, they said.
“When compared with some of the more highly rated retirement systems, the U.S. falls short because employers do not have to offer a retirement plan, employees do not have to save and can easily withdraw what they do save, and our levels of personal debt cripple the ability of young workers to ever begin to save for their future,” said Angela Antonelli, executive director at Georgetown University's Center for Retirement Initiatives.
She called these “fundamental and persistent challenges” to Americans' retirement confidence and security.
Yet, several states have launched so-called “auto-IRA” programs to boost worker access and try closing the retirement savings gap.
Auto-IRAs require businesses that don't offer a retirement plan to facilitate payroll deduction into a state-run program. They're still in the “early stages of implementation,” but have already accumulated 845,000 new funded accounts and 212,000 registered employers, she said.
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