Survey: Nearly a quarter of middle-class Americans expect to never retire

Is the American Dream falling out of view? According to our 2022 Middle Class Survey conducted in partnership with The Harris Poll, nearly half (49%) of middle-class Americans (those with an annual household income of $35,000 to $99,000) grade themselves at a C or lower on their ability to achieve the so-called American Dream. When looking specifically at those who are currently renting, that number jumps to 62%. What’s perhaps more distressing is that nearly a quarter of those surveyed (23%) who haven’t already retired say they expect to never be able to retire.¹

What are some key takeaways from this and other studies, and what can retirement plan sponsors and financial advisors do to address the current woes of the middle class?

The middle class is shrinking

These results fall in line with what is being observed by other researchers as a general shrinking of the middle class. Pew Research Center analyzed government data to find that the share of adults living in middle-class households fell from 61% in 1971 to 50% in 2021.² (Pew defined middle class as households with annual income of $52,000 to $156,000.)

Some members of the middle class have moved into the upper-income tier, while there’s also been an increase in those moving to the lower-income tier. Between 1971 and 2021, the percentage of those in the lower-income tier rose from 25% to 29%.²

With the middle class shrinking and feeling less confident about their retirement, it’s imperative to promote responsible financial guidance and provide retirement plans that work — the earlier, the better.

Workplace benefits matter

Our survey also addressed how retirement plans can affect middle-class workers and their decisions to remain with their employers or seek work elsewhere. According to the survey, 83% said workplace benefits have an impact on their decisions around career advancement or staying with their employer.¹ As one might expect, COVID-19 is affecting this too, with 46% of respondents saying the pandemic has increased the importance of workplace financial benefits.¹

This is why it’s crucial to offer a retirement plan that truly offers value to participants. People are paying closer attention to these benefits, and if an employer wants to attract and retain quality workers, they’ll need to offer an attractive benefit plan.

It’s wise to also pay attention to the developments of the new Secure Act, also known as Secure 2.0, which could bring major changes to workplace retirement plans that should benefit participants.

Boost confidence in timely retirement

1 If this becomes a trend year over year, financial advisors may need to strategize how they can help middle class clients plan their finances so they can boost their chances of an on-time retirement.

Advisors need to help clients optimize their retirement savings plans without neglecting their current bills, responsibilities and happiness. Plan sponsors need to find ways to make retirement plans deliver even more value to employees. And together, advisors and sponsors can encourage financial learning and engagement, to help empower participants to do even more to save.

The bottom line is that more middle-class Americans are losing confidence in their financial futures and, essentially, their dreams. These kinds of numbers suggest more middle-class Americans may be looking for better ways to secure their future right now. And employer-provided retirement savings plans are well positioned to help.

Develop and promote a retirement plan for a secure future

Plan advisors can help pitch plans that work for employers and their employees. This survey points to people who are losing hope for a bright future, but you can help bring some of that hope into view again with the right benefit plan and proper strategizing.

That 23% of survey respondents said they expect to never retire should be a wakeup call for anyone in the financial industry.¹ It’s vital to provide clients and employees with sound financial advice and 401(k) options that make the best use of their resources to lay the groundwork for retirement.

Cuna Mutual Group makes it easy to partner with us to offer customized solutions that help plan sponsors and participants achieve their goals. We take an individualized approach to create customized plan options and offer investment solutions to help put retirement security within reach for more employees. Please review our available solutions to get started learning more about our available resources and solutions.

SOURCES
¹2022 Middle Class Survey conducted on behalf of CUNA Mutual Group by The Harris Poll among middle class Americans who have an annual HHI income of $35,000-$99,999.
²Pew Research Center, How the American middle class has changed in the past five decades, April 20, 2022

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