Less than 40% of workers feel their retirement savings are on track

A recent Federal Reserve Board study shows that less than half of non-retired adults feel confident about their retirement savings

Less than 40% of workers feel their retirement savings are on track

Jon VoglerTime to read: 2 min

According to a May 2018 report from the Federal Reserve Board, less than 40% of non-retired adults think their retirement savings are on track — while over 40% feel their savings are not on course, and about 20% are not sure.

The “Report on the Economic Well-Being of US Households in 2017” draws from the Board’s fifth annual Survey of Household Economics and Decision-Making, which polled more than 12,000 people in November and December 2017.

Respondents’ answers varied with the amount of current savings and time remaining until retirement.

  • 71% of respondents ages 18-29 with at least $10,000 set aside for retirement reported confidence that their savings were on track.
  • 67% of respondents ages 40-49 with at least $100,000 saved agreed that their retirement savings were on course.
  • And of those with at least $500,000 of savings, nine in 10 respondents considered themselves on track, regardless of age.

Early withdrawals from retirement accounts

According to the report, some respondents withdrew money from their retirement accounts early for purposes other than retirement. Overall, 5% of non-retirees borrowed money from their retirement accounts in the past year, 4% have permanently withdrawn funds and 1% have done both. Perhaps not surprisingly, those who took early withdrawals were less likely to view their retirement savings as on track than those who had not — 27% versus 39%, respectively.

Self-directed retirement savings

Among those with self-directed retirement savings (including 401(k)s, individual retirement accounts [IRAs] and savings outside of formal retirement accounts), comfort in managing these investments is mixed. The report found that 60% of non-retirees with these accounts reported little or no comfort in managing their investments. On average, women of all education levels and less-educated men are less comfortable managing their retirement investments than other groups. The report also noted that — based on the replies by respondents to five basic questions about finances — people who feel comfortable managing their investments may or may not have the actual knowledge to do so.

Retirement timelines and income considerations

In choosing when to retire, respondents most commonly cited a desire to do other things besides work and also spend more time with family. However, poor health was cited as a contributing factor for 40% of retirements before age 62 and one-third of retirements between ages 62 and 64. Nearly 25% of those who retired before age 65 said the lack of available work contributed to their decision.

For income in retirement, in 2017 86% of retirees in 2017 received Social Security benefits; 56% drew on a defined benefit (DB) plan, and 58% used savings from an IRA, 401(k) or other defined contribution (DC) plan. The types of retirement savings for current retirees differ substantially from non-retirees, for whom DC plans are much more common than DB plans.

Overall, the report notes that economic well-being has generally improved over the past five years, with 74% of adults reporting that they were doing at least okay financially in 2017 — up 10 percentage points from the first survey in 2013. Despite these improvements, the report emphasizes that notable differences remain across race, ethnicity, education groups and locations.


PlanSponsor, “Fed report offers picture of retirement readiness situation in America,” Rebecca Moore, May 23, 2018

NAPA Net, “Many adults feel behind in their retirement savings, Fed survey shows,” Ted Godbout, May 25, 2018

Important information

Blog header image: TTstudio/Shutterstock.com

Jon Vogler
Senior Analyst
Retirement Research, Invesco Consulting

Senior Analyst Jon Vogler draws on extensive pension expertise to offer retirement thought leadership for Invesco. In addition to writing Invesco’s Retirement blog, he tracks legislative and regulatory developments and contributes as a writer and editor to a variety of retirement-related Invesco communications.

Prior to joining Invesco in 2008, Jon spent more than 25 years in the research, writing, compliance and underwriting areas of the retirement services industry, including roles as a senior consultant at Mutual Benefit Life’s pension consulting firm and as a compliance manager in the Automatic Data Processing retirement services division.

Jon earned the Fellow, Life Management Institute (FLMI) and Competent Toastmaster (CTM) designations. He has a B.A. in History from Rutgers, The State University of New Jersey.

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