The retirement outlook for America’s middle class isn’t pretty. New research from the Transamerica Center for Retirement Studies, cited in InvestmentNews, paints a picture of workers across generations who are saving but falling short—often by a wide margin.
The study surveyed more than 10,000 middle-class households with incomes between $50,000 and $199,999. The findings show widespread retirement readiness gaps that vary significantly by age group. Most concerning: Even those who are actively saving haven’t accumulated nearly enough to meet their own retirement income estimates.
Catherine Collinson, CEO and president of Transamerica Institute and TCRS, put it bluntly: “The middle class embodies the American dream, but their retirement outlook is unclear.”
Here’s what the data shows by generation:
Workers in their twenties are off to a decent start. While 77% report saving for retirement, median household retirement savings sit at just $43,000—far below the $300,000 they estimate they’ll need. More troubling, 28% have already taken an early withdrawal, and only 17% express confidence in their financial knowledge.
The pattern continues with thirtysomethings, where 83% are saving but median balances hover around $54,000. Less than one-third have a written financial plan, and early withdrawals remain common at 23%.
By the time workers reach their fifties, the stakes get higher. Median savings for this group clock in around the same levels as younger cohorts, yet they’re running out of time to course correct. Ms. Collinson warned that this generation must protect their health, stay employable, and build realistic financial strategies that account for potential setbacks.
For sixty-somethings approaching or in retirement, median savings range from $203,000 to $277,000, depending on whether they’ve already retired. Only a quarter have a written plan, and less than half work with an advisor during what should be their most intensive planning years.
These gaps point to concrete action items for plan sponsors and advisors. Early withdrawal rates signal that participants lack emergency savings and financial cushion—problems that emergency savings accounts and better plan design can address. Low financial literacy across all age groups suggests education programs aren’t reaching employees effectively. And the absence of written plans, particularly among older workers, shows that access to advice remains insufficient.
The disconnect between what people think they need and what they’re actually saving demands attention. Workers estimate needing around $300,000 for retirement in their younger years, yet few are on track to hit even that modest target. The gap only widens as responsibilities pile up—near-term financial obligations such paying off debt, supporting aging parents, and managing daily expenses all compete with retirement savings.
Plan sponsors have tools to help. Auto-enrollment and auto-escalation features can boost participation and contribution rates without requiring employees to take action. Student loan matching programs can help younger workers save while managing debt. And providing access to professional advice—whether through managed accounts, one-on-one guidance, or workplace education—can help participants at every age build realistic strategies.
One obvious conclusion: Middle-class workers need more support than they’re currently getting. As Ms. Collinson explained, solving this issue requires collaboration across policymakers, employers, and financial services. But plan sponsors and advisors sit in the best position to make an immediate impact on the participants they serve.
