Principal® research shows that most working Americans say saving for retirement is a high priority, even when they see obstacles in their path.
Life rarely follows a straight path. Saving for retirement is no different; as we travel various roads, our retirement savings patterns may shift with our ups and downs. Yet Americans still want to make saving for retirement a priority.
For instance, Principal research shows that most working Americans say saving for retirement is a high priority even when they see obstacles in their path.
Against this backdrop, our latest retirement research sheds light on the financial priorities and challenges facing employees, along with opportunities for their employers to help.
In 2024, Americans saved for their retirement at a robust pace despite inflation and interest rate pressures. Nearly six out of 10 of those surveyed saved at least 9% of their annual income for retirement — generally putting them near the recommended range of around 15% when factoring in matching contributions from employers.
Now, as Gen Z enters the workforce, most Americans for the first time are saving for retirement through their workplace plans. Alongside that, we see retirement savings habits improving when comparing the youngest workers to those well into their working years. In retirement plans Principal services, the average savings rate for participants under 40 years old has increased by more than 15% overall from 2006 to 2023.
Among all this positive momentum, there’s still room for improvement. Savings behaviors are strong, but employees often lack confidence in their retirement readiness , or misjudge how much retirement savings they need. Two-thirds of employees (66%) overestimate the savings they’ll need by age 65 to live comfortably in retirement. That includes more than half (56%) who believe they should have at least 30 times their annual salary saved—nearly triple the common industry benchmark of saving 10-12 times an annual salary.
| Percent of employees who think they need the stated range of savings by age 65 to be on track for a comfortable retirement | |
|---|---|
| More than 30 times their annual salary |
|
| 13-29 times their annual salary |
|
| 10-12 times their annual salary |
|
| A common industry recommendation is for individuals to save 10-12 times their current annual salary by age 65. | |
| 0-9 times their annual salary |
|
When it comes to spending in retirement, 54% think they can safely withdraw 10% or more of their savings annually without outliving their nest eggs, more than double the industry rule-of-thumb of withdrawing about 4% annually.
In other words, Americans may be compounding their financial anxiety when misjudging savings targets during their careers and withdrawal rates once they retire. Education is making a difference from one generation to the next in terms of savings rates, but we can keep encouraging this progress on behalf of more personalized retirement and financial goals.
Industry benchmarks can be useful for general guidance, but each person’s unique situation calls for a financial plan—personalized for them—with retirement goals focused on what they value most.
Principal research shows that two-thirds of employees recognize they need help with retirement planning, highlighting the need for financial education and advice in the workplace. Nearly three-quarters (72%) are comfortable seeking assistance from financial professionals. Employers, too, can play a vital role, as 62% of employees say they’re comfortable receiving retirement planning support through workplace programs.
85% of employers report they get help from retirement plan providers to communicate retirement information to participating employees.
We can keep striving to support working Americans with the tools and resources they need to plan for a financially secure future. We can collaborate on how to cater to the habits and preferences of a 401(k) generation coming of age, and on what they expect from their employers, financial professionals, and retirement providers. We can offer personalized advice to meet employees where they are and help them understand and implement best practices and gain confidence in their retirement readiness.
Together, we can help more Americans make fully informed financial decisions throughout their careers and into retirement.
