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Josh was working a job he loved, but not saving a lot. He knew he should be putting more away for retirement, but life kept getting in the way.
Then his parents got sick.
Everything he thought he would have time to plan for caught up with him, and now, he’s worried he’ill never be able to retire.
At 50 years old, he doesn’t have a lot of time left to save. His total retirement nest egg is $60,000.
When he had to quit his job to take care of his parents, it took a huge bite out of his savings. He left the job before he was fully vested, so he lost some of the employer contributions to his 401(k). He also made withdrawals from his 401(k), which came with penalties.
Luckily, he owns his home and is ready to downsize, in order to lessen the burden of keeping up both an aging house and a big yard. Since the house needs some work, he thinks he would net about $400,000 if he sold it.
Josh has now returned to the workforce, with a new job that brings in $40,000 a year. He wants to figure out how to maximize his savings and rebuild his retirement plan.
It’s becoming more commonplace that Americans choose to delay retirement because they are in a situation like Josh’s.
According to a recent survey by F&G Annuities & Life of 2,000 Americans over 50, 23% have already chosen to delay retirement — a jump from 14% in 2024. Reasons people gave for this decision included worries about having enough retirement savings, worries about inflation and fears of a stock market downturn.
The survey also found that 70% of respondents were considering or were delaying when they would leave the workforce.
Another survey by Northwestern Mutual found that 51% of respondents said it’s somewhat or very likely that their retirement savings could run out. When 4,500 Americans over 18 were asked how much they thought they needed to save to retire, the “magic number” was $1.26 million. But for those who have begun saving, 25% say they have a year or less of their annual salary in savings.
How much does the average American actually have saved? The most recent data, from the 2022 Survey of Consumer Finances, found the median retirement savings of Americans to be $87,000. A far cry from $1.26 million, but close to where Josh currently finds himself. Still, his savings are low for his age. According to the Northwestern survey, 52% of gen-Xers say they have three times their current annual income or less saved.
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