US ‘pre-retiree’ households are unprepared to retire

Many pre-retirees are running out of time to accumulate sufficient retirement assets. Just over 80 percent of baby boomers may be unprepared for retirement, according to a McKinsey & Company survey in 2021 and 2022 (Exhibit 1). The surveys asked about respondents’ financial sufficiency in retirement (asking whether households have sufficient assets to cover expected spending),² as well as their retirement confidence (whether they feel adequately prepared to manage their finances). Approximately 47 percent of households nearing retirement report that they have not achieved financial sufficiency, including 20 percent who are in the safety net, reliant heavily on Social Security for retirement income, and 27 percent who are financially at risk of not maintaining their working years’ standard of living. Another one-third of households are financially near the line, in that their assets leave little to no margin for shocks like market downturns, continued inflation, or family health changes. That leaves only 19 percent of pre-retirees likely to be fully financially secure.

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