One setback could derail many Americans' retirement plans

• Key Insight: Learn how broad retirement account participation masks significant retirement readiness gaps.
• What's at Stake: Unexpected expenses could trigger widespread shortfalls, affecting workforce retention and benefits policy.
• Supporting Data: 2025 Readiness Index scored 57.7/100, placing Americans in "elevated risk."
• Source: Bullets generated by AI with editorial review

Americans are at an elevated risk of not reaching their retirement goals despite broad participation in savings and investment accounts, according to a new national survey.

The findings by retirement provider IRALOGIX show that many Americans are just one unexpected expense, job disruption or healthcare event away from falling behind. 

IRALOGIX's 2025 Retirement Readiness Index assesses how prepared Americans are for retirement with 16 questions across five key areas: savings and investments, healthcare readiness, lifestyle and spending, emotional well-being, and economic and policy confidence.

Everyone has a different set of retirement goals, and some can be very personal, says Peter de Silva, CEO of IRALOGIX. But this index shows that there's a lot of apprehension across the board in terms of how they're going to achieve those goals, he added. 

Read more: TIAA lays out plan to close gaps in retirement system

"Every American worker deserves a retirement that's full of dignity … as they live out their later years," de Silva says. "This [data] says many Americans may not achieve even that baseline goal. It also indicates to me that the system is not perfect."

Key findings

The 2025 Retirement Readiness Index national score registered 57.7 out of 100, placing overall retirement readiness for the year in the elevated risk category. 

Of the five areas evaluated, savings and investments ranked the strongest, revealing broad participation in retirement accounts, though contribution consistency remains uneven. Lifestyle and spending showed moderate strength, suggesting many households manage day-to-day finances but lack confidence in sustaining their lifestyle through retirement.

Emotional well-being remains relatively stable, indicating that confidence and outlook have not collapsed despite ongoing economic uncertainty.

Meanwhile, healthcare readiness ranked among the weakest areas, highlighting limited preparation for medical and long-term care costs. Economic and policy confidence scored lowest, reflecting persistent concern about inflation, economic volatility and the stability of retirement-related policies.

"Retirement readiness is about more than just your 401(k) or IRA," de Silva says. "From the very beginning of your career, you should take advantage of every retirement strategy available to build a strong foundation. A score of 57.7 shows that participation alone is not enough."

For many families, one of the greatest barriers to increasing retirement savings is the absence of a rainy-day fund, de Silva says. 

Read more: How AI is disrupting retirement planning for the better

According to a 2025 study by Empower, the median emergency savings for Americans is $500, and one in three have no rainy-day fund. Twenty-nine percent say they can't afford an unexpected expense over $400.

The size of the safety net varies by generation, the study found, with Boomers saving a median rainy-day fund of $2,000 — five times that of Gen Z's reserves of $400.

Read more: A job-hopping slowdown could be a boon for retirement savings

Ideally, families should have about six months of liquidity, de Silva says, enough to cover a medical emergency, auto repairs or any other unexpected expense that inevitably comes up. 

"That gives you the comfort to put some money away for the longer term," de Silva says. "I think the other issue is that Americans understand that if they put that money away for the longer term, they're penalized if they take it out early … We want to make sure Americans don't see their retirement plan as a source of near-term liquidity."

Benefit leaders can play a big role in helping their employees save for retirement. Simply having a 401(k) program is not enough — most employees are looking for help and benefit leaders should make sure their retirement programs have advice solutions and are easy to access, says de Silva. 

"The bottom line is companies that get this are going to retain and attract talent much better than companies that don't," he says.