Road to retirement for middle class looks different depending on life stage

Priorities in life among members of the middle class, depending on someone’s age, can influence their retirement outlook, according to a new report.

The Transamerica Center for Retirement Studies, in collaboration with the Transamerica Institute, has published a new report based on surveys of different age ranges across the middle class. 

Overall, 63% of the surveyed middle class Americans cited enjoying life and 61% said that being healthy are their top priorities in life. But different pressures and expectations, depending on where someone is at in life, can have a big effect on their ability to retire down the road, the study found.

When it comes to planning for long-term care, almost half of surveyed middle class retirees (43%) said they plan to rely on family or friends if they need help. One in three (33%) said they plan to move to an assisted living community, whereas 29% said they plan to use home care and 11% plan to move to a nursing home. Just more than a fourth (26%) of respondents said they don’t have any long-term care plans, including 30% of those in their 60s and 22% aged 70 or more years.

“[The American middle class] is working hard and saving for the future, but their ability to achieve a financially secure retirement is hanging in the balance,” Catherine Collinson, CEO and president of the Transamerica Institute and TCRA, said in a statement. “People in the middle class need more support from policymakers, the financial services industry and employers. 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.”

People aged 70 or more years already are retired and focused on their health. They might be faring well financially, but they are unprepared to pay for long-term care, Collinson said. Among their greatest retirement fears are declining health that requires long-term care (45%), cognitive decline or dementia (39%), and losing their independence (39%).

Only 16% of this group indicated that they were confident in their ability to afford long-term care. Almost half (49%) said they plan to receive care from family and friends if needed, and 22% said they don’t have plans in place. 

Similarly, 60-somethings are exiting the workforce and prioritizing enjoyment of life, according to the report. They said their biggest retirement concerns include reduced Social Security benefits (46%) and outliving their savings (43%). 

Respondents in their 50s might have the highest retirement anxiety, according to the findings. They have entered what Collinson called the “retirement danger zone” — they are falling short on their savings, and the window for saving for retirement is closing. For many, the solution is to extend their working years, retire later in life and save more now. Their ability to do that, however, depends on factors sometimes out of their control, including their health and access to employment opportunities. 

Forty-somethings, the report stated, are spread thin, juggling careers, family and finances. Many in this age bracket are making financial tradeoffs between their immediate needs and long-term goals out of necessity; 21% of respondents said they held down two or more jobs, and 36% said they have a side hustle. In addition, 44% said they are worried that artificial intelligence and robotics will make them obsolete. Although most are saving for retirement, many are at risk of falling behind, according to Collinson.

Younger groups, in their 20s and 30s, are establishing their careers but also worrying that technologic advancements could threaten their future jobs. In many cases, they also are being called on to be caregivers for aging loved ones. Like their 40-something counterparts, many said they are working second jobs or have side gigs to save for their future retirement.

“The middle class embodies the American dream, but their retirement outlook is unclear,” Collinson said. “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.”

The report, part of the TCRS’s 25th Annual Retirement Survey, is a follow up to its 2024 The Retirement Outlook of the American Middle Class report. The latest report is based on an online survey conducted by The Harris Poll between Sept. 11 and Oct. 17, 2024, among 10,000 US adults.