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Retirement Planning > Saving for Retirement

Most Americans Think There's a 'Retirement Crisis' — But Not for Themselves

By John Manganaro

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What You Need to Know

  • Pundits and everyday Americans talk about a retirement crisis set to unfold.
  • A new survey suggests that many Americans are more worried for their peers than for themselves.
  • Improving access to retirement savings in the workplace is seen as an important goal across the board.

While media pundits and everyday Americans talk about a “retirement crisis” set to unfold, the actual U.S. retirement readiness picture is far more nuanced.

In fact, as demonstrated by a recently published PGIM survey, a majority of American workers feel that their own retirement preparedness is on track but also widely believe that the nation’s retirement system is falling short for their peers.

Specifically, the survey confirms a widely held perception that “a national retirement crisis exists,” with 58% of respondents somewhat or strongly agreeing with this statement. However, when asked the top reason they believe this, 52% of respondents cited “the situations of people they know” — more than the 43% who cited their personal situation.

Another driver of the crisis belief, according to the survey, is retirement media coverage, cited by some 42% of respondents.

“While I understand the perspectives and obstacles Americans face when it comes to saving for retirement, I prefer to think of the current state as a challenge, not a crisis,” said David Blanchett, a portfolio manager and head of retirement research at PGIM DC Solutions.

While some groups continue to lack access to the retirement savings system, Blanchett pointed out, those who do have access are participating in “one of the best in the world.”

In addition, policymakers and other key stakeholders such as employers and state governments are making changes to increase the availability of workplace retirement plans and improve the behaviors among employees participating in them. Such priorities are to ensure Americans that they can live a better life in retirement.

Perception vs. Reality

Blanchett was intrigued by how an individual’s situation related to general perceptions.

“Those who describe their own situation as a crisis are nearly twice as likely to agree there is a national crisis,” he said, “but many more are basing their perception on media coverage or the situations of others.”

Also striking, Blanchett said, is that it may not take much to change these perceptions. Individuals with as little as $10,000 to $50,000 in retirement assets were less than half as likely to describe themselves as being in crisis relative to those people who had not yet amassed any savings.

Specifically, while 48% of respondents aged 55 with no assets described their situation as a crisis, this dropped to 22% for households with $10,000 to $50,000 in savings. The figure fell to 11% for those with $50,000 and $100,000 in savings and to only 3% for those with assets over $500,000.

Getting people to retirement with savings levels of least $50,000, Blanchett said, would likely improve preparedness perceptions.

“Overall, this study suggests there is a significant amount of nuance around perceptions of a retirement crisis particularly depending on age, income and employment status,” Blanchett said. “Everyone’s path to financial security later in life is unique, and those unique needs should be considered as part of the solution to these challenges.”

Other Key Findings

Far fewer Americans describe their own retirement situation as in crisis, the survey shows, with only 39% somewhat or strongly agreeing with this statement. At the same time, about one-third feel indifferent on the question, and 29% outright disagree.

Notably, perceptions of a personal crisis drop significantly by age, particularly among retirees who have already left the workforce. This reflects prior survey work suggesting it is the unknown aspects of life after work that seem to drive feelings of dread and worry more than a clear understanding of what the retired life will look like for most people.

In the end, the biggest predictor of whether someone believes there is a national retirement crisis was if they viewed their own retirement situation as in crisis, Blanchett noted.

For instance, of the 30% of respondents who somewhat or strongly agreed that their personal retirement situation was in crisis, 87% believed there was a national retirement crisis. In contrast, among those who did not describe their personal retirement as in crisis, only 40% believed there was a national crisis.

Pictured: David Blanchett

John Manganaro

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