- Key Insight: Uncover how middle-class workers are adjusting their retirement strategies as traditional pensions disappear.
- What's at Stake: Middle-class workers relying on extended careers who face unexpected obstacles to staying employed.
- Forward Look: On the horizon: AI and robotics reshaping the workforce and disrupting delayed retirement plans.
Source: Bullets generated by AI with editorial review
A growing number of middle-class workers expect to rely more heavily on 401(k)s and similar retirement plans as government- and employer-funded pensions fade away, according to a new report.
Many expect self-funded savings to be their primary source of retirement income, with 42% citing the category overall, the Transamerica Institute survey found. That includes 31% who expect to rely on 401(k)s, 403(b)s and IRAs and 11% who point to other savings and investments.
"In recent decades, the retirement landscape has been shifting away from government- and employer-funded pensions," said Catherine Collinson, CEO and president of nonprofit Transamerica Institute and its division Transamerica Center for Retirement Studies. "At the same time, individuals have become increasingly expected to self-fund more of their retirement income through 401(k) and similar plans and IRAs."
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"The American Middle Class: Influences of Gender on Retirement Security" delves into the well-being, finances and
"The middle class embodies the American dream," said Catherine Collinson, CEO and president of Transamerica Institute and TCRS. "Amid today's rapid pace of change, inflation, and uncertainties about the future, how are they contending with mounting financial pressures?"
The report sought to answer that question by examining how the middle class is balancing competing financial priorities. Top priorities include paying off debt (58%), saving for retirement (50%), building emergency savings (42%), saving for a major purchase or life event (32%), covering basic living expenses (31%), supporting children (28%), and paying healthcare expenses (21%).
Amid inflation in recent years, 7 in 10 (72%) have taken one or more actions because of financial strain, including reducing day-to-day expenses (40%), dipping into savings accounts (34%), accumulating new credit card debt (23%), and missing rent or mortgage payments (9%).
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Men are more likely than women to prioritize saving for retirement, at 53% versus 47%. Women, meanwhile, are more likely than men to prioritize covering basic living expenses, at 35% compared with 27%.
"The middle class is feeling the effects of inflation, juggling competing financial priorities, and making hard choices," Collinson said.
Staying in the workforce longer
Many middle-class Americans
Among those still in the workforce, 1 in 3 expect to retire at age 70 or older or do not plan to retire at all. Women are more likely than men to expect to do so, at 36% versus 30%.
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But those plans don't always work out. Retirees reported a median retirement age of 63 for men and 62 for women, and nearly half (48%) retired sooner than planned. That includes 45% of men and 50% of women. Among those who retired early, men were more likely than women to do so for employment-related reasons (62% versus 44%), while women were more likely to cite family-related reasons (30% versus 17%). Another 17% of men and 11% of women said they retired earlier than planned because they had saved enough
"Middle-class workers' plans to work longer and retire at an older age could be easily thwarted by AI and robotics, which are reshaping the workforce and the future of work. Many middle-class workers are worried about job obsolescence," Collinson said.
