Retirement seems uncertain for most middle-class people: study

Only one-fifth of middle-class Americans say they are very confident they can retire fully or maintain a comfortable lifestyle in retirement, according to a new survey. study from the nonprofit Transamerica Center for Retirement Studies in partnership with the Transamerica Institute.

The study broadly defines the middle class as people with annual household incomes between $50,000 and $199,000.

“The middle class symbolizes the American dream,” Catherine CollinsonCEO and president of Transamerica Institute and TCRS, said in a statement. “In today’s chaotic environment, what are the hopes, dreams and retirement prospects of the middle class? What support is needed from policymakers to ensure they can retire with dignity? Our new report seeks to answer these pressing questions.”

Harris Poll conducted an online survey on behalf of the Transamerica Institute and TCRS between September 14 and October 23 among a nationally representative sample of 10,002 adults, including 5,726 with household incomes between $50,000 and $199,999.

Middle class finances

Participants in a survey of middle-class people reported difficulty balancing financial priorities, such as paying off debt, saving for retirement, building an emergency fund, saving for a major purchase or life event, while still just barely meeting basic living expenses.

Among middle-class respondents who have not yet retired, 49% said they expect to work past the traditional retirement age, and 52% plan to continue working after retirement. However, the report noted that retirees’ actual experiences raise questions about whether these expectations are realistic.

The average age at which middle-class retirees leave the labor market is 62. Half retired earlier than planned, often due to work or health problems.

The survey found that the middle class is not fully engaged in retirement planning. Only 21% of respondents said they have a lot of practical knowledge about personal finance, 24% have a financial strategy for retirement in the form of a written plan, and 17% regularly discuss saving, investing, and retirement planning with family and close friends. Only 34% of respondents said they use a professional financial advisor.

Perhaps as a result, only a quarter of middle-class respondents strongly agreed that they were saving enough for retirement, or that they had done so. At the end of 2023, middle-class respondents who are not yet retired reported having saved an estimated median of $66,000 in total household retirement accounts. Middle-class retirees reported an estimated median of $186,000 in total household savings, excluding home value.

The middle class is counting on a variety of sources of retirement income, according to the survey. Forty-five percent of respondents expect their primary source of retirement income to come from self-funded savings, including 401(k)s, 403(b)s, IRAs and/or other savings and investments.

Twenty-seven percent said their primary source of retirement income would be Social Security, 11% said it would come from a company-sponsored retirement plan, and 9% expect income to come from continued employment. Only 2% cited home equity or an inheritance as their primary source of retirement income.

“By gaining knowledge and engaging in financial planning, the middle class can make more informed decisions in their daily lives, which in turn can improve their long-term retirement prospects,” Collinson said. “But they also need better, stronger societal support.”