Retirement Looks Precarious for Most in Middle Class: Study

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

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

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

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

Middle-Class Finances

Middle-class survey participants reported that they are juggling financial priorities that include paying off debt, saving for retirement, building emergency savings, saving for a major purchase or life event and just getting by to cover basic living expenses.

Among middle-class respondents who are yet to retire, 49% said they expect to work beyond the traditional retirement age, and 52% plan to continue working after they retire. The report noted, however, that retirees’ actual experiences raise doubts about whether these expectations are realistic. 

The median age that middle-class retirees left the workforce is 62. Half retired sooner than planned, often because of employment or health-related issues.

The survey found that the middle class has yet to fully engage in retirement planning. Only 21% of respondents said they have a lot of working knowledge about personal finance, 24% have a financial strategy for retirement in the form of a written plan and 17% frequently discuss saving, investing and retirement planning with family and close friends. Just 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 building a large enough retirement nest egg, or had done so. As of late 2023, middle-class respondents who are not yet retired reported that they had saved an estimated median $66,000 in total household retirement accounts. Middle-class retirees reported an estimated median $186,000 in total household savings excluding home equity.

The middle class is counting on diverse 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-funded pension plan and 9% expect income to come from continued work. Only 2% cited home equity or from an inheritance as a primary source of retirement income.

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