The world in which Americans now plan for retirement is more complicated than ever, as Americans face the realities of financial insecurity. By the fourth quarter of 2024, the average 401(k) balance reached an all-time high of $131,700. At the same time, the average Individual Retirement Account (IRA) balance jumped to $127,534. These numbers are, despite being the second-highest averages on record, a stark contrast to alarming trends when it comes to retirement security.
As noted by retirement experts, the current generation of retirees will likely be the last to rely on them. This extends to pensions, which have traditionally been a bedrock for retirees. This shift puts the onus of retirement savings mostly on today’s workers. As a result, millions are on the verge of being squeezed by the damning reality of unpreparedness for their future financial wellbeing.
That’s pretty impressive, given that the recent Retirement Confidence Survey found the lowest retirement confidence in nearly three decades. Fewer than seven in ten (67%) Americans with a retirement plan express confidence about their future retirement prospects. This marks a seven-percentage-point decrease from last year. The “magic number” needed to retire comfortably has now fallen to an average of $1.26 million in 2025, down $200,000 from last year. Even that figure seems discouraging for most people who can’t imagine saving that much.
The effects of a volatile stock market have played a role in shaping American attitudes toward retirement, as well. As of this writing in 2025, the S&P 500 is down nearly 10% year-to-date. At the same time, the tech-heavy Nasdaq Composite has tanked by over 15%. Millions more are adjusting their expectations for retirement in the wake of these losses. Consequently, millions expect to make less money in retirement than they once thought they would.
Additionally, an alarming 51% of respondents in Northwestern Mutual’s research reported that they are worried they’ll run out of money in retirement. Americans are more worried than ever about their ability to live comfortably in retirement. This worry comes amid a backdrop of inflation being quelled, but savings still do not measure up.
These basic retirement planning rules of thumb are starting to face their own criticism. The 4% rule proposes that retirees can draw down their investments by 4% per year with confidence. Yet, for many people, this guideline is no longer realistic or practical. Time to shoot for at least 10x your income by the time you’re set to retire. This is referred to as the “10 times earnings” rule for retirement savings. For many others, reaching this milestone seems more and more out of reach.
Considering all of these hurdles, people are recalibrating their expectations about saving for retirement. Though lower inflation rates have come as something of a relief, they are not a substitute for real, significant savings. Many workers confront the reality that they are largely on their own when planning for retirement, making strategic financial decisions critical.