Middle class retirement readiness: Your generation by generation guide

America’s middle class is facing significant challenges to achieve a secure retirement, according to new research.

Drawing on responses from 10,009 adults with annual household incomes between $50,000 and $199,999, the Transamerica Center for Retirement Studies research explores how retirement readiness varies across age cohorts and highlights where financial advisory intervention may be most impactful.

Asked about their current priorities for life, 63% said enjoying life and 61% want to be fit and healthy, followed by 42% who want to focus on family and 42% cited planning their financial future, with 25% centered on their career.

“The middle class embodies the American dream, but their retirement outlook is unclear,” said Catherine Collinson, CEO and president of Transamerica Institute and TCRS. “The middle class is working hard, caring for their families, and saving for the future while navigating an evolving economy, artificial intelligence, the aging population and need for caregivers, and Social Security uncertainties.”

Key Insights by Age Group

Twenties: While 77% of young middle-class adults report saving for retirement (via 401(k)s or other means), median accumulated household retirement savings stand at around $43,000 and 28% have taken an early withdrawal.  They cite median estimated needed savings of $300,000 but only 17% say they have “a lot” of financial-knowledge confidence.

“Twentysomethings may be strained, but most are saving for retirement. They are getting a strong start with decades for their savings to compound and grow. However, they need to learn about personal finance because the better-informed decisions they make early on can have a long-term impact,” says Collinson.

Thirties: A significant 83% are saving for retirement, median savings about $54,000 in retirement accounts with 23% having taken an early withdrawal. But only 29% have a written financial plan and 18% claim strong financial-knowledge confidence. $500k is the median amount that this cohort estimate they need to feel financially secure in retirement. Only 18% say they have “a lot” of working knowledge about personal finance, and 29% have a financial strategy for retirement in the form of a written plan.

“As thirtysomethings focus on their financial future, one of the most impactful things they can do is to create a financial plan and consult with a professional financial advisor, if needed. The financial plans they create today will serve as a roadmap throughout their working years and into retirement,” says Collinson.

Forties: With median retirement savings near $73,000, 80% of this group are saving with 21% having taken an early withdrawal. $500k is the median amount that fortysomethings estimate they need to feel financially secure in retirement. Only 18% say that they have “a lot” of working knowledge about personal finance, and 24% have a financial strategy for retirement in the form of a written plan.

“Fortysomethings are in their sandwich years of juggling career, family, and finances. Out of necessity, they are making financial trade-offs between immediate needs and long-term goals. Retirement is still a couple of decades away, but now is the time for them to formalize goals, create financial plans, make course corrections and seek the services of a professional advisor,” says Collinson.

Fifties: Here the urgency grows. Median household retirement savings for non-retired fifty-somethings stand at $112,000, yet only 21% have a written strategy and 29% work with a professional advisor. $600k is the median amount that fiftysomethings who are not yet retired estimate they need to save to feel financially secure in retirement

“Fiftysomethings have entered the retirement danger zone,” Collinson warns. “Many are falling short on their savings and their window of time before retirement is closing. Working longer can help bridge savings gaps but success is not guaranteed. Fiftysomethings must be hypervigilant about safeguarding their health and keeping their job skills up to date. It is also critical that they create a financial strategy for retirement that anticipates potential setbacks.”

Sixties: Of those in their 60s, median savings for non-retirees are $277,000 in retirement accounts; retirees hold about $203,000 outside home equity. With only 25% having a written plan and 43% working with an advisor, the transition phase remains under-managed.

“During their transition from work to retirement, sixtysomethings should engage in retirement planning and work with a professional financial advisor, if needed. By learning expert strategies, they could potentially maximize their income and Social Security benefits, minimize their tax liability, and, ultimately, ensure their savings last their lifetime,” says Collinson.

Seventies and older: Among those 70 and older, long-term care looms large: only 16% express high confidence about affording it, while 47% rely on professional advisory support. Retirees who are age 70 and older have $286,000 in total household savings excluding home equity (estimated median). Eighteen percent have $1,000,000 or more and 19% have less than $50,000.

“People in their seventies and older experience declines in health and may eventually need assistance with daily activities. For those who haven’t yet explored available options for long-term care, it is crucial to have family discussions, research care providers, and anticipate the cost of such care. A proactive approach can make transitions easier – versus waiting until a crisis when emotions are running high and options may be limited,” says Collinson.

The report, part of TCRS’ 25th Annual Retirement Survey, should be a call to action for individuals, policymakers, business, and the wealth management and advisory industry.

“People in the middle class need more support from policymakers, the financial services industry, and employers,” concludes Collinson. “A collaborative approach to implement solutions can ensure that the middle class has access to workplace retirement benefits, products and services, social safety nets, and the know-how that is required for success.”