Retirees skipping meals to stretch plummeting savings, survey says

A new study by real estate data specialist Clever shows the retirement crisis in the U.S. has substantially worsened over the past year due to rising prices and a falling stock market.

The average retiree has $170,726 in savings, down from $191,659 at the start of 2022, according to Clever’s study. Meanwhile, the study reveals that 37% of retirees have no retirement savings at all, up from 30% last year.

The $170,726 figure represents a mere 31% of the $556,400 recommended under Fidelity’s guidelines, which suggest having 10 times one's income saved when entering retirement, with the median U.S. income at $55,640. Unfortunately, the survey of 1,000 retirees showed that only about 1 in 8 retirees (12%) say they have at least the recommended $555,000 in savings.

“We should be alarmed by the percentage of retirees that do not have adequate savings," said Alex Goss, co-founder and co-CEO of NewEdge Advisors. "This shouldn't be a concern for only retirees as the financial responsibility will ultimately fall on the yet-to-retire class. With the additional long-term concerns around Social Security solvency, this isn't just tomorrow's problem — it's today's."

The survey also revealed that inflation has forced many retirees to make drastic sacrifices, with 18% saying they have “skipped meals” and 24% saying they have “skipped medical treatments” to make their money last longer.

The survey results illustrate that retirees often enter their later years without realizing how much money they will need to spend in retirement. Nearly 3 in 5 retirees (57%) say the cost of retirement shocked them. According to U.S. labor statistics, the average retiree's household spends a not insignificant $51,048 a year, or $4,254 each month, which may help explain why 48% of retired Americans believe they'll outlive their savings.

Leslie Beck, owner and principal at Compass Wealth Management, says she doesn't find these findings surprising.

“Drawing down your savings when the markets absorb losses creates a double whammy-effect that can be difficult to recover from," Beck said. "Yet the problem is that many retirees at the lower end of the income spectrum don't have the option to modify spending because they have nondiscretionary needs like food and shelter. The lesson in all this is to save as early as possible.”

An overwhelming 87% of respondents said the government should do more to help retired Americans. Social Security serves as a source of income for about 79% of retirees in 2023, and 30% of retired Americans say Social Security is their only form of income, according to Clever’s report.

That said, the retirees surveyed did accept some responsibility for their lack of retirement savings with 51% admitting they did not sufficiently prepare for their retired years.

Joy Budnik of Jackson Square Capital pointed out that the survey’s implied 11% decline in savings during 2022 is less than the 19.4% drop in the S&P 500, so the actual average savings number could even be lower than $170,726. In her mind, the problem could be even worse than the study suggests, especially when one considers what it revealed about health care issues and expenses for retirees.  

“One thing that stands out has to do with health," Budnik said. "The study found 65% of retirees stopped working sooner than they planned, with half citing health concerns, while 18% of retirees have medical debt.

"To give clients peace of mind when it comes to health- and aging-related expenses, we suggest having dedicated funds for this category," she said. "That may come in the form of spending budgeted toward the expense, a dedicated bucket of savings or an insurance policy to cover care.”