Retirement Savings Slipping Out of Reach
A new report from Goldman Sachs reveals that a growing share of Americans are finding it nearly impossible to save for retirement, as more workers live paycheck to paycheck. The study, based on a survey of 3,600 workers and 1,500 retirees, found that 42% of younger Americans — including Gen Z, millennials, and Gen X — say they have no disposable income after covering basic expenses. Among them, three-quarters report they are struggling to put aside any money for retirement.
The number of Americans in this precarious position has climbed sharply since 1997, when 31% of workers reported living paycheck to paycheck. Goldman projects that figure could surpass half of all workers by 2033, as the costs of housing, health care, and other essentials continue to rise.
The Financial Vortex
Goldman Sachs describes this situation as a “financial vortex” that traps workers between rising costs and the pressure to save. Greg Wilson, head of retirement at Goldman Sachs Asset Management, said the old advice to “just save more” no longer matches economic realities. Household expenses have dramatically expanded over the past 25 years: homeownership now consumes 51% of after-tax income, compared to 33% in 2000, while health care has jumped to 16% from 10%.
These pressures come as retirement security has shifted largely onto individuals following the decline of traditional company pensions and the rise of 401(k) plans in the 1980s. Workers must now make their own investment decisions, savings contributions, and drawdown strategies, a system experts argue is inadequate for many households.
Gen X Feels the Pinch
The burden is especially heavy for Generation X, currently aged 45 to 60, who entered the workforce as pensions were phased out. Nearly half of Gen X workers told researchers it would take a “miracle” to retire, according to a Natixis study last year. With retirement approaching, many face significant gaps that may be impossible to close with savings alone.
Goldman noted that some strategies could help future generations, such as beginning small annual savings from childhood. For instance, setting aside $500 a year from ages 1 through 20 could increase retirement savings by 14%. Other recommendations included diversifying into private market investments, which could also boost savings by 14% over time.
Structural Challenges and Limited Access
While strategies exist, not all workers can take advantage of them. Roughly half of U.S. private-sector employees lack access to employer-sponsored retirement plans like 401(k)s, according to the Pew Charitable Trusts. Those without employer plans often report greater difficulty in building wealth, further exacerbating disparities.
Some relief may come under proposed reforms that would expand 401(k) access to alternative investments such as private equity and cryptocurrencies, although such changes remain controversial. Meanwhile, experts recommend workers use employer-offered emergency savings programs when possible, to avoid tapping into retirement funds for unexpected expenses.
The findings highlight a widening retirement gap that policymakers and workers alike will struggle to close. With living costs climbing and wages failing to keep pace, many Americans may find financial security in retirement increasingly out of reach.
