60% of Americans Aren’t Saving Enough for Retirement

Saving for retirement is important if you hope to maintain your financial security as you age, but like many other things, it's often easier said than done. After paying your bills and any unplanned expenses that come up, you may not have much left over to put away for the future.

You're definitely not alone. A 2024 AARP survey found that nearly one in five Americans 50 and older have no savings and more than half are worried they don't have enough. Another report by the Federal Reserve found that close to a third of Americans couldn't afford to cover a $400 emergency in cash. When you're living paycheck to paycheck like this, it's understandable if debt relief ranks higher on your list of concerns than retirement savings.

Fortunately, it's never too late to begin taking steps toward a more comfortable retirement. Understanding your barriers to retirement savings and how much you need to live on annually in retirement is key. Then, you can begin to formulate a plan that will help you get where you want to go.

Barriers to Retirement Savings

You may encounter one or more of the following barriers to retirement savings throughout your career.

Lack of access to employer-sponsored retirement plans

Employer-sponsored retirement plans, like 401(k)s, make saving automatic because you can defer a portion of each paycheck. Then, you don't have to worry about manually transferring funds to your retirement account. Some 401(k)s also offer a matching contribution, where your employer contributes money on your behalf. 

Not all employers offer retirement accounts to their employees. That doesn't mean it's impossible to save for retirement. You could still stash money in an IRA, for example. But you will have to set this up on your own.

Shift from pensions to defined contribution plans

Past generations could rely upon a "three-legged stool" in retirement—personal savings, Social Security, and a pension. Pensions were employer-funded retirement plans that paid out a guaranteed amount once you reached a certain age. But employers have moved away from these types of plans in favor of defined contribution plans, like 401(k)s.

Your employer may contribute some money to your 401(k) in the form of an employer match, but it's now up to you to save for the majority of your retirement expenses on your own by deferring money out of your paychecks.

Rising living costs

Inflation drives up the cost of living over time. In some years, it may not be very noticeable while at other times, like during the COVID-19 pandemic, it puts quite a squeeze on your wallet. It's only natural in situations like this to prioritize your present expenses over retirement savings.

Stagnating wages

Though not true of every employer, many companies' wages have been outpaced by inflation over the past several years especially. Indeed found that 43% of workers have seen their expenses rise more quickly than their wages, meaning their paychecks don't go as far today as they used to. 

Financial stress

When thinking about your finances gives you a lot of anxiety, it's tempting to just avoid it. But it's possible to take positive steps toward a comfortable retirement even if you don't know that much about finances or investing.

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The Current Retirement Savings Crisis in America

Workers today face different challenges when saving for retirement than in generations past. Previous generations could rely upon pensions from their employer to pay for a large chunk of their retirement savings. But over the past several decades, employers have migrated to 401(k)s and other plans that shift more of the onus onto workers.

Some 57 million workers don't even have access to one of these plans. This doesn't mean it's impossible to save for retirement, though. 

Rising living costs and stagnating wages have also created challenges for workers who find themselves juggling higher costs and fewer funds. This could leave you with little cash to spare for retirement savings.

In some cases, it could also lead to debt. The AARP survey found that nearly one-third of older adults carry $10,000 or more in credit card debt. Getting out from under this, possibly with the help of a company like Freedom Debt Relief, could be the boost you need to start building your nest egg more quickly.

It's understandable if you feel like you may never be able to afford to retire. Roughly one in four workers today feel the same. It could be more doable than you think, though. The key is to understand what's holding you back and what you need for retirement. Then, you can build a plan that works for you.

Saving for Retirement

According to a recent survey conducted by Freedom Debt Relief, 60% of American households are saving less than $1,000 per year for retirement. It’s not that Americans don’t want to build retirement savings. They often just find it difficult to have money to set aside. 

You may know the feeling. You work hard, but bills add up quickly. Keeping the lights on and food on the table naturally comes before future goals like retirement. Sometimes, even if you otherwise have good financial habits, when you're done paying your monthly bills, there isn't a lot left over.

According to the survey, 32% of Americans say that everyday expenses are the biggest barrier they face when trying to increase their retirement savings, and 17% said that their debt was getting in the way of their savings.

But just because you haven't been able to set aside retirement savings before doesn't mean you've missed the boat. There are small steps you can take to prepare for retirement right now, and they don't all require money, either. 

One of the most important things you can do is educate yourself about retirement savings, including how much you need and what tools could make the job easier.

How Much Should You Save for Retirement?

Many factors affect how much you need in retirement savings, including:

• Your age

• The cost of living where you plan to retire

• Whether you expect to have other sources of retirement income (i.e. a job, Social Security)

• Your life expectancy

• Your health

• How you plan to spend your time in retirement

You'll find different recommended savings goals depending on which sources you consult. A Stanford Center on Longevity report recommends saving between 10% and 17% of your annual income, beginning at age 25 if you hope to retire comfortably at 65. If you earn $40,000 per year, that would mean saving between $4,000 and $6,800 annually. For someone earning $60,000 per year, your goal would be between $6,000 and $10,200.

Another way to approach this is to aim for certain multiples of your salary by certain ages. Fidelity recommends having 1x your salary by age 30, 3x by age 40, 6x by 50, 8x by 60, and 10x by 67. That might sound a little overwhelming at first, but if you're investing your savings, a lot of that money will come from investment earnings rather than your own contributions.

Don't be discouraged if you haven't been able to save this much so far. According to CIBC, 69% of Americans aren't saving the recommended amount for retirement. If saving 10% of your income isn't feasible for you right now, start with what you can do, whether that's 8%, 5%, or even less. Saving any amount for retirement is better than not saving at all. 

If you want a more precise estimate of how much you should save, a retirement calculator could help you out. One helpful calculation is to estimate your annual living expenses, and then subtract the income you’ll receive from Social Security. The difference is the amount of money you’ll need each year from your own savings.

For example, if you think you'll need $50,000 per year to cover your retirement expenses and you expect to get $20,000 per year from Social Security, then you need to save enough to cover $30,000 of expenses per year on your own.

Retirement savings rule of 25

One popular rule says to take the annual expenses you need to pay on your own, then multiply this by 25. This is supposed to tell you the amount of savings you need to cover your retirement expenses for 30 years, assuming you withdraw 4% per year. In our example above, multiplying $30,000 by 25 would give you a retirement savings goal of $750,000.

When Should You Start Saving for Retirement?

Now, because time is the most important factor in building wealth for retirement. Your money is like a snowball at the top of a hill, and the investment income is the snow that builds as the ball rolls down the hill. The longer the snowball rolls, the bigger it gets.

The same is true of your retirement savings. The earlier you start saving and investing, the more likely you are to have enough for retirement. For example, if you start saving $5,000 per year at age 25 and earn a 7% return on your investment, your retirement account will be worth about $1 million when you hit age 65. On the other hand, if you wait until you’re 45 to begin, you need to save over $24,000 per year to end up with $1 million at age 65 (assuming the same 7% rate of return).

State and Federal Retirement Initiatives

Data from AARP shows that Americans are 15 times more likely to save for retirement when they have access to a workplace plan. Several states have enacted auto-IRA plans that require employers who don't offer a workplace retirement account to enroll their employees in an IRA to give them a chance to save for retirement. You can opt out of these programs or change the deferral amount. If you do nothing, the auto-IRA plan will generally stay at 3 to 5% of your earnings.

Currently, the following states have auto IRA programs:

• California

• Colorado

• Connecticut

• Delaware

• Hawaii

• Illinois

• Maine

• Maryland

• Minnesota

• Nevada

• New Jersey

• New York

• Oregon

• Rhode Island

• Vermont

• Virginia

Washington will join this list in 2027. Many other states have also made efforts to implement automatic IRAs, so if yours doesn't have an auto-IRA program now, keep an eye out for this in the future.

There's also been efforts at the federal level to institute some type of auto-IRA program. Recent legislation, like the Retirement Savings for Americans Act of 2023 and the Automatic IRA Act of 2024 haven't found the support they need in Congress, but it's possible that a future bill will draw in the necessary votes to make automatic IRA enrollment an option for Americans in all states.

What Tools Can Help You Stay on Track with Retirement Savings?

There are a lot of great apps and tools to help with retirement savings today. Here are a few favorites:

• Empower has a terrific retirement calculator and a 360-degree view of your money.

• OnTrajectory is another great retirement planning tool and calculator.

• Robo-advisor apps are low-cost ways to invest for the future that take the stress out of managing your investments on your own.

• Mint offers a free version of its app for basic budgeting and saving.

In order to be a good steward of your money, it’s also important to keep track of what you have and what you spend. There are many tools, like the Mint app, to help you do just that.

The Role of Debt in Retirement Planning

Saving for retirement is a lot easier when you're not weighed down by high-interest debt. Credit card debt, in particular, can be hard to get rid of with average interest rates of around 21.16% as of May 2025, according to the Federal Reserve. But there are ways to deal with it.

You could try the debt snowball approach, where you make the minimum payment on all your cards and put any extra cash you have toward the card with the lowest balance until it's paid off. Then, you move onto the card with the next-lowest balance, and so on.

A debt consolidation loan is another option. This is where you take out another loan, like a HELOC or a personal loan, to pay off your credit card debt. This could get you a lower interest rate and a predictable monthly payment, but it only works if you're committed to making a change. If you charge up your cards again, you'll be even worse off than you started.

If you don't think there's any realistic way you can pay back what you owe in full, debt settlement could be the right choice for you. This is where you negotiate with your creditors to get them to accept less than what you owe but consider it full payment. You could do this on your own or with the help of a company like Freedom Debt Relief—here’s how our program works. We help people just like you find debt relief. Once you've gotten your debt off your plate, you can put the money that had been going toward these payments toward your retirement savings instead.

Top Tips to Ensure You’re Saving Enough for Retirement

Here are some tips that could help you build your retirement savings:

• Create a budget and reduce expenses where possible. Sometimes, once you see where your money is going, you can identify areas to cut back. Then, you could put this extra money toward retirement.

• Pay down high-interest debt if possible. Getting debts with high interest rates, like credit card debts, off your plate could give you more money for retirement savings. If you need help dealing with your debt on your own, consider a debt relief program.

• Claim a 401(k) match if you're eligible. This is money your employer puts in your retirement account on your behalf to match some or all of the money you put into your 401(k).

• Use an IRA if you don't have access to a 401(k). Traditional IRA contributions save you money on taxes right away, but you pay taxes on withdrawals from these accounts. You pay taxes on your Roth IRA contributions in the year you make them, so you can usually withdraw them tax-free in retirement.

• Automate your retirement savings. A 401(k) should let you put a portion of each paycheck into your account. IRAs may let you link a bank account and set up an automatic money transfer on a schedule that works for you.

• Increase your retirement savings whenever you get a raise. Do this as soon as possible to help your money grow even faster.

• Bank your windfalls. If you get a year-end bonus or a tax refund, put that money into a retirement account rather than spending it.

• Continue to invest during market ups and downs. The stock market naturally goes up and down. Losing money from time to time is normal, even if it isn't fun. Stay the course and keep investing on a regular schedule if you can.

• Consider a side hustle. If your regular job only pays enough to cover your bills today, you may need to look into a side hustle to get some extra money coming in for retirement savings.

Take It One Day at a Time

Just because you're behind on retirement savings now doesn't mean you're doomed to stay that way. If you're sincere about trying to improve your situation, you stand a good chance at a more comfortable retirement. Once you've estimated how much you need to save, try one or more of the strategies above for a few months to a year. Then, revisit your plan to see what worked and what didn't and keep making adjustments as needed.