'Financial vortex' of priorities squeezing workers' retirement prospects, Goldman says

As the cost of living continues to outpace wage growth, a new report from Goldman Sachs Asset Management suggests that millions of Americans are struggling to balance immediate financial needs with long-term retirement goals – a challenge that may reshape the way advisors approach retirement planning.

According to the 2025 Retirement Survey and Insights Report, 42% of younger working respondents – including Gen Z, Millennials, and Gen X say they are living paycheck to paycheck, while nearly three-quarters report difficulty saving for retirement.

That's due to what Goldman Sachs calls the “Financial Vortex” of competing financial priorities, a problem that an increasing number of sandwich-generation Americans are all too familiar with.

The Goldman report projects that more than half of US workers could be living paycheck to paycheck by 2033, with that figure rising to 65% by 2043, raising questions about the future affordability of retirement for many Americans.

Major life events, such as buying a home, marriage, or sending a child to college, have a non-trivial impact on savings behavior. Among Gen Z and Millennials, 66% and 59%, respectively, have experienced at least one major life event in the past two years. Of those, 70% said they either paused retirement contributions, took a loan from a retirement plan, or planned to retire later as a result.

Those disruptions, added up, can be devastating. Illustrative scenarios in the report show that a ten-year delay in starting to save for retirement could reduce total savings by 38%, while being out of the workforce for eight years could result in a 27% decline. Multiple disruptions over a career – an especially pressing issue for women – could lead to a 43% shortfall in retirement savings.

“The cost of major life events is taking up a larger percentage of household income, a trend that affects workers at the lowest level of income as well as the highest,” said Greg Wilson, head of retirement at Goldman Sachs Asset Management.

He added that while “the ‘save more’ strategy may be sufficient for some, many others will need to more thoughtfully use investment, advice, and retirement income strategies to close their savings gap.”

Despite these headwinds, the report finds that optimism remains high among workers, with 68% expressing at least some confidence in meeting their retirement goals. However, only 34% say they are very confident, and 58% believe they may outlive their retirement savings. Nearly half of respondents find managing retirement savings stressful.

The report highlights several strategies that could help close the retirement savings gap. Access to employer-sponsored retirement plans, such as 401(k)s, is associated with a 29% higher savings-to-income ratio compared to those without access.

Goldman estimates that seeding early savings accounts with $500 annually from ages one to twenty can boost final retirement savings by 14%. Personalized retirement planning is also linked to better outcomes, with retired respondents who saved with a personalized plan reporting a 27% higher savings-to-income ratio than those who did not.

The use of annuities and other guaranteed income products is also gaining traction as a way to address longevity risk. The report projects that allocating 30% of retirement savings to a single premium income annuity with a 7.1% payout can increase retirement income by 23%, relative to the traditional and likely outdated 4% withdrawal rule.

“Plan providers can help retirement savers responsibly integrate these solutions into a personalized retirement plan to improve outcomes,” said Greg Calnon, co-head of public investing at Goldman Sachs Asset Management.