Middle Class Retirement: A Juggling Act

Transamerica Center for Retirement Studies and Transamerica Institute released a study: The American Middle Class: Influences of Gender on Retirement Security. The survey examines the well-being, finances, and retirement preparation for Americans with a household income of $50,000 to $199,999. Below is a summary of their findings:

·       Feeling positive but financially and emotionally strained: Most middle-class Americans report strong relationships, happiness, and enjoyment of life, but many also experience exhaustion, trouble making ends meet, and feeling overwhelmed. Women report higher levels of distress than men.

·       Juggling competing financial priorities: Inflation and financial strain have forced many to cut expenses, use savings, take on credit card debt, or miss housing payments. Key priorities include paying down debt, saving for retirement, building emergency savings, covering basic expenses, supporting children, and paying health care costs.

·       Aspiring to work longer and retire later: One-third of non-retired middle-class adults expect to retire at age 70 or later or never retire. However, many current retirees left the workforce earlier than planned, showing that health, employment changes, family needs, and affordability can disrupt retirement plans.

·       Concerned about job security and workplace change: Nearly half of non-retired respondents worry that AI and robotics could make their job skills obsolete, which may threaten plans to extend working years and close retirement savings gaps.

·       Facing retirement income insecurity: Many expect self-funded savings to be their primary retirement income source, while nearly three in 10 expect to rely mainly on Social Security. High living costs, debt, insufficient income, and uncertainty about Social Security are major barriers to saving adequately.

·       Showing gender gaps in retirement readiness: Men report higher median retirement savings than women and are more likely to expect income from retirement accounts. Women are more likely to rely on Social Security, prioritize basic living expenses, report financial stress, and express concern about saving challenges.

·       Confronting caregiving and long-term care needs: More than one-third of middle-class adults have served as caregivers during their careers or retirement. Many retirees expect to rely on family and friends for future care if their health declines, with men more likely than women to expect care from a spouse.

·       Overall implication: The middle class remains optimistic about life but faces significant financial, workplace, retirement, and caregiving pressures that could undermine long-term retirement security.

You can read their study here.