More than half of peak 65 Americans “almost certain” to outlive their savings

A recent study by the Alliance for Lifetime Income has revealed significant financial challenges faced by Americans on the brink of retirement.

The research indicates that half of Americans aged 61 to 65, known as peak 65 consumers, have already retired and begun claiming Social Security benefits. The findings highlight a growing dependence on Social Security amid concerns about inadequate retirement savings.

The 2024 Protected Retirement Income and Planning study, now in its sixth year, surveys both consumers and financial advisors to provide a comprehensive view of the retirement landscape.

The study found wide disparity in investable household assets among peak 65 consumers, which shapes their outlook on retirement. Fifty-one percent have less than $100,000 in assets, 25 percent have assets between $100,000 and $500,000, 13 percent have assets ranging from $500,000 to $1 million, and 11 percent possess assets exceeding $1 million.

Jean Statler, chief executive officer of the Alliance for Lifetime Income, emphasized the financial uncertainty many face.

"More than half of Peak 65 consumers have saved $100,000 or less. It's almost certain they will run out of savings and have to rely on Social Security as their only income," Statler said in a statement.

The study revealed a mixed picture on the emotional impact of these financial challenges among peak 65 Americans. Thirty-four percent of respondents expressed worry about their financial situation, while 33 percent felt confident. And even as 39 percent were uncertain, 42 percent remained optimistic about their financial future.

Focusing on retirement timing, the study found that half of peak 65 consumers have already retired, with the average retirement age being 57.7. Those still working plan to retire at an average age of 67.1. Americans who retire earlier than planned are often influenced by unforeseen circumstances, according to Satler.

A significant portion of peak 65 consumers have already begun claiming Social Security payments, with nearly half (49 percent) doing so. Among these, 66 percent have less than $100,000 in investable household assets. Key reasons for early claims include disability or inability to work (43 percent), the need for income (40 percent), and concerns about the future availability of Social Security (30 percent).

"There is real concern that Social Security will not be able to support people who are relying on it as their primary source of retirement income, which is why Congress needs to act now," said Jason Fichtner, executive director of the Alliance's Retirement Income Institute.

Highlighting the trend of the growing 'sandwich' generation, the survey found four-fifths (38 percent) of peak 65 consumers are have at least one living parent or in-law, and 28 percent are supporting adult relatives financially. Eighteen percent of those providing that financial assistance reported that it affects their retirement savings and income.

With nearly half of Peak 65 consumers uncertain whether their retirement savings will last their lifetime, the study underscores the importance of financial planning. Statler concluded, "There is still an opportunity for millions more to be financially secure in retirement if they protect themselves with an annuity."

The study’s findings align with a separate report by the Alliance's Retirement Income Institute, which found that two-thirds of Baby Boomers turning 65 between 2024 and 2030 are not financially prepared for retirement.