Americans May Not Be Saving Enough to Reach Retirement Goals

However, when real estate is considered, households may be in better shape for retirement than anticipated, according to Hearts & Wallets.

More households than ever (35%) in the past seven years “want to stop working/retire at a certain age,” analyses by Hearts & Wallets find.

After a several year trend of a majority wanting to work as long as health permits, that number dropped to less (45%) this past year. Hearts & Wallets speculates that the increase in the desire to stop work is a reflection of a greater control of their ability to work due to the “gig” economy.

One in four U.S. households has at least one partner employed in the gig economy, rising to four in 10 for older workers. Seventy percent of workers, and even higher percentages of older workers, say alternative employment is by choice, the analyses find.

Participation in an employer-sponsored retirement plan (ESRP) is one way to prepare to stop work, Hearts & Wallets notes. Yet even as eligible household participation remains at above 80%, the portion of savings going into these plans continue to decline. The analyses find the average rate of savings was 39% in 2014 and has declined to 35% in 2016. The savings rate is not impacted as much by age, as average household participating in an ESRP devotes about one-third of savings to the plan, a figure steady across life stages. Participation is highest among those ages 40 to 52, the life stage with the highest percentage of savings devoted to ESRPs.

Looking more comprehensively at U.S. retirement readiness, about six in 10 households expect to use personal assets for retirement income. Most are underfunded using traditional wealth measures.

The portion of U.S. households saving 4% or more rose to nearly half (48%), driven by the less than $100,000 wealth group last year. Still one in four households saved nothing at all or spent more than income, and one in four mid-life and post-retirement households are not adding to savings. Only one in four households saved over 10% of income. 

The analyses find real estate plays a vital role in household wealth and has potential to be incorporated into financial advice and guidance experiences. For households with less than $500,000 in investable assets, real estate represents more than half of assets. Even for wealthier households, real estate still averages one-quarter to one-third of total assets.

“Households may be in better shape for retirement than anticipated using a broader view of household wealth, but much work needs to be done in partnership with financial services to prepare and support Americans going forward on their choices, from employment, saving, spending to investments,” says Laura Varas, CEO and founder of Hearts & Wallets.

The reports, “Income & Net Wealth” and “Retirement & Funding,” are drawn from the section of the Hearts & Wallets Investor Quantitative Database analyzing the behaviors and attitudes of more than 5,000 IQ Database households. More information is at