Retirement expectations grow while savings lag behind
A new national study reveals a widening gap between what Americans believe they need for retirement and what they’ve actually saved. According to financial firm Northwestern Mutual’s 2025 survey, U.S. adults now estimate they will need $1.26 million to retire comfortably at age 65. This figure has surged from $951,000 in 2020, reflecting growing concerns about inflation, healthcare costs, and longevity.
Despite these rising expectations, the average savings balance falls well short. The study found that a staggering 25% of Americans with retirement accounts have saved just one year’s worth of their current income or less. More than half (52%) report having saved less than three times their annual income.
Confidence in retirement preparedness remains low
The findings underscore a deepening anxiety around retirement security. More than half of respondents (54%) said they do not believe they’ll be financially ready to retire when the time comes. This lack of confidence is compounded by the fear of outliving savings, with 51% of participants saying they believe it’s somewhat or very likely they’ll run out of money during retirement.
Experts point to a variety of contributing factors, including stagnant wages, inconsistent financial planning, high debt loads, and the rising cost of living. Additionally, many workers remain uncertain about the reliability of Social Security and employer-sponsored pension programs, leading to greater pressure on personal savings accounts like 401(k)s and IRAs.
Retirement planning faces new generational challenges
The study also suggests that younger generations are feeling the weight of long-term financial insecurity. While retirement may seem distant for millennials and Gen Z, many are already skeptical of their ability to ever retire. The pandemic, housing affordability, and student loan debt have further strained their ability to contribute meaningfully to retirement plans.
Meanwhile, older adults nearing retirement age are grappling with insufficient savings and delayed exit timelines. Many plan to continue working past 65, not by choice, but by necessity. With retirement costs rising and savings habits lagging, financial literacy and early planning are becoming more crucial than ever.
Urgency grows for strategic financial planning
Northwestern Mutual’s findings serve as a wake-up call for individuals and policymakers alike. As life expectancy rises and traditional retirement models face pressure, Americans are being urged to reassess their financial strategies and start saving earlier. Employers and financial institutions may also need to play a greater role in offering tools, education, and incentives to close the retirement gap.
For now, the growing divide between retirement expectations and reality presents one of the most pressing financial challenges facing the U.S. workforce.
