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Many Americans want to stop working at 60 and live to 100. Can they afford it?
A significant swath of Americans now expect to spend almost 40 years in retirement, with about 1 in 8 workers planning to stop working before they turn 61. At the same time, most workers say they want to live until they’re 100.
That means some workers are eyeballing a four-decade retirement, an ambitious goal that comes with serious downsides. Among them: How to fund almost 40 years of retirement at a time when most workers are far from reaching their savings goals.
The findings, from a recent survey from financial services firm Corebridge Financial, underscore the gap between Americans’ lofty dreams for their golden years versus their financial realities. The median retirement savings balance for people who are between 55 to 64 — just years from potentially stepping back from work — is $185,000, according to NerdWallet.
“100 is a very long and fulfilling life, and that’s pretty optimistic and great to see,” Bryan Pinsky, president of individual retirement at Corebridge Financial, told CBS MoneyWatch. “That optimism and hope does come with a little bit of tension — only 27% are very or extremely confident that they won’t outlive their retirement savings.”
In fact, the survey, which polled about 2,300 adults, found that only about 4 in 10 respondents believe their savings will last 20 years in retirement, suggesting that while more Americans want a three- or four-decade retirement, few expect they’ll have funds that will stretch that long.
The rule of thumb for retirement savings is to draw down 4% of one’s retirement assets each year. That means someone with $185,000 saved in a 401(k) will have annual income of $7,400 from their savings — hardly a big cushion, especially if one needs extra medical care or assisted living in old age.
Even more troubling are the 3 in 10 Americans over 59 years old who don’t have a penny saved for retirement. Those workers are likely to spend decades in old age surviving solely on Social Security, a plan that’s geared to replace only a portion of one’s working income. The typical retiree on Social Security receives $22,800 annually from the program — above the poverty line, but hardly enough to fund a cushy retirement.
Only about 10% of Americans between the ages of 62 and 70 are both retired and financially stable, Teresa Ghilarducci, a professor at The New School for Social Research in New York and a retirement expert, recently told CBS MoneyWatch. Increasingly, her research has found, many seniors need to return to work to earn extra money despite being “retired.”
The realities of longevity risk
Longevity risk is a cornerstone of retirement planning that few Americans understand, Stanford University expert Annamaria Lusardi told CBS MoneyWatch last year. This issue involves understanding how long you’re likely to live once you hit retirement age, with many Americans underestimating this figure — and therefore failing to sock away enough money to support themselves.
On the other hand, workers who believe they’ll live until 100 might be motivated to stash away more money for their retirement years.
Interestingly, Gen Z, the youngest generation in the workforce, is also the most optimistic about reaching their centennial anniversaries, with about 63% saying they want to reach the milestone. That’s about 10 percentage points higher than baby boomers or Gen X.
That could explain why Gen Z is taking retirement more seriously than older generations did at their age. About 3 in 10 Gen Zers (who are between 11 to 26 years old) currently have a 401(k) or IRA, compared with 1 in 10 Gen Xers when they were the same age in 1989, according to a recent study from the Investment Company Institute.
How to fund a 40-year retirement
Asked how to fund a retirement that can stretch almost 40 years, Pinsky noted that it’s important for workers to start saving. And he encouraged workers to visit a financial planner or expert who can help them devise a retirement plan.
“What is most important is recognizing whatever your retirement plan is, you need to revisit it on a regular basis,” he added.
That’s good advice for people who have access to employer-sponsored retirement plans, but experts like Ghilarducci point out that the U.S. retirement system is failing millions of Americans. For one, many workers lack access to 401(k)s and other employer-sponsored matches, especially people who are gig workers, low-wage employees or unpaid caretakers for family members.
Saving early is key, given the power of compound interest, but many young workers are strapped by student loans and the high cost of living and thus may not feel able to set away funds.
To be sure, millions of workers retire every year, even if they don’t have the $1.8 million that Americans say they need to retire comfortably. But retirement is increasingly something enjoyed by the rich, with Ghilarducci’s research finding that low-income workers typically spend about 12 years in retirement, while the rich spend about 20 years in retirement.
The following is a transcript of an interview with Sen. Mark Kelly, Democrat of Arizona, on “Face the Nation with Margaret Brennan” that aired on Oct. 6, 2024.
MARGARET BRENNAN: Joining us now is Arizona’s Democratic Senator, Mark Kelly. He’s in Detroit this morning on the campaign trail for the Harris campaign. Good morning to you, Senator.
SEN. MARK KELLY: Good morning, Margaret.
MARGARET BRENNAN: I want to talk to you about Arizona, but let’s start in Michigan, which is where you are right now. And it is going to be such a key state to a potential Harris or Trump victory. Vice President Harris is facing challenges among black men, working class people, as well as the Muslim and Arab populations skeptical of the White House support for Israel’s wars. What are you hearing on the ground there from voters?
SEN. KELLY: Well, my wife, Gabby Giffords, and I have been out here for a couple days. We’ve been campaigning across the country, Michigan, I’ve been in North Carolina, Georgia as well. I’ll be back to Arizona here soon. The vice president was out here speaking to Muslim organizations and the Arab community about what is at stake in this election and addressing the concerns that they have. What we’re hearing, issues about the economy, about gun violence, about, you know, supporting American families and the difference between Donald Trump and Kamala Harris. You know, Kamala Harris, who has a vision for the future of this country, Donald Trump, who just wants to drag us backwards.
MARGARET BRENNAN: Today in Dearborn, Michigan, there’s a funeral service for an American man who was killed in Lebanon by an Israeli airstrike. It just underscores how that community you’re talking about out in Michigan feel some of what’s happening in a personal way to their community. Given how close this race is, do you think this war and the expectation it could escalate could cost Democrats both a seat in the Senate and potentially the presidency?
SEN. KELLY: Margaret, nobody wants to see escalation and it’s tragic when any innocent person, whether it’s an American or Palestinian, lose their life in a conflict. Tomorrow’s one year since October 7th, when Israel was violently attacked. Israel has a right to defend itself, not only from Hamas, but from Hezbollah and from the Iranians. But, you know, I and my wife, you know, we feel for the community here who’s been affected by this. And that’s why the vice president was out here earlier, a few days ago, meeting with that community.
MARGARET BRENNAN: But it’s a live issue.
SEN. KELLY: Yeah, sure. I mean, there is an ongoing conflict in the Middle East. Israel is, you know, fighting a war now on, I think it’s fair to say, two fronts and then being attacked by the Iranians as well. And, they- they need to defend themselves, and we need to support our Israeli ally. At the same time, when women and children lose their life, innocent people in a conflict, it is- it is tragic.
MARGARET BRENNAN: You do sit on the Senate Intelligence Committee and so I know you know how intense the efforts are by foreign actors to try to manipulate voters going into November. Just this Friday, Matthew Olsen, the lead on election threats at the Department of Justice, told CBS the Russians are, quote, highlighting immigration as a wedge issue. That is such a key issue in Arizona. Are you seeing targeted information operations really focusing in on Arizonans right now?
SEN. KELLY: Not only in Arizona, in other battleground states. It’s the Russians, the Chinese, the Iranians, and it’s significant. And we need to do a better job getting the message out to the American people that there is a huge amount of misinformation. If you’re looking at stuff on Twitter, on TikTok, on Facebook, on Instagram, and it’s political in nature, and you may- might think that that person responding to that political article or who made that meme up is an American. It could be- it could look like a U.S. service member. There is a very reasonable chance I would put it in the 20 to 30% range, that the content you are seeing, the comments you are seeing, are coming from one of those three countries: Russia, Iran, China. We had a hearing recently, with the FBI director, the DNI, and the head of the National Security Agency. And we talked about this. And we talked about getting the word out. And it’s up to us, so thank you for asking me the question, because it’s up to us, the people who serve in Congress and the White House to get the information out there, that there is a tremendous amount of misinformation in this election, and it’s not going to stop on November 5th.
MARGARET BRENNAN: Understood. And we will do our best to help parse that for viewers. But on the topic of the border, President Biden did announce just this past week new regulations to keep in place that partial asylum ban that he rolled out back in June. That’s what’s credited with helping to bring down some of the border crossing numbers in recent weeks. It was supposed to be a temporary policy, dependent on how many people were crossing at a time. Do you think this is the right long term policy, or is this just a gimmick to bring down numbers ahead of the election?
SEN. KELLY: Well, the right long term policy is to do this through legislation. And we were a day or two away from doing that, passing strong border security legislation supported by the vice president, negotiated by the vice president, and the president and his Department of Homeland Security, with Democrats and Republicans–
MARGARET BRENNAN: But this is not legislation.
SEN. KELLY: –This is bipartisan. This isn’t. But the legislation was killed by Donald Trump. We were really close to getting it passed. That’s the correct way to do this. When you can’t do that, Margaret, when a former president interrupts the legislative process the way he did, which is the most hypocritical thing I’ve ever seen in my three and a half years in the Senate. After that happened, the only other option is executive actions. And this has gone from what was chaos and a crisis at our southern border to somewhat manageable. And if you’re the border- Border Patrol, you know, this is this- you need this. I mean, otherwise it is unsafe for Border Patrol agents, for CBP officers, for migrants, for communities in southern Arizona. So it’s unfortunate that this was the- these were the steps that had to be taken.
MARGARET BRENNAN: Okay.
SEN. KELLY: But that’s because the former president didn’t allow us to do this through legislation.
MARGARET BRENNAN: Senator, we have to leave it right there. Face the Nation will be right back.
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Sen. Mark Kelly says Americans need to know about “huge amount of misinformation” on election
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