Among Americans age 65 and older, Social Security benefits represent 52% of income on average, the study found. Retirement plans — both traditional pensions and 401(k)-style accounts — account for 19% of income.
Income from work accounts for 12%, while property and investments provide 6%.
Statistics vary greatly by population group. Social Security provides 60% of income for black American adults and 55% for Hispanic adults, compared to 51% for white adults and 46% for Asian adults.
Those with a high school education or less rely on Social Security for 63% of their income, while those with a bachelor’s degree receive only 33% from the program.
A great lifeline for home equity
Retirement funds represent about one-third of the financial assets of the average working adult, while home equity accounts for one-third.
Among workers ages 55 to 64, median retirement savings stood at $30,000, compared to $130,000 in home equity. Young workers ages 21 to 34 have a median retirement income of just $3,150 and no median household income.
Racial differences also persist in wealth accumulation.
White workers have a median retirement savings of $20,000 and a home value of $125,000. Black workers have a median retirement income of $874 and no median household income. Hispanic workers have zero average retirement savings and zero home equity.
Adjust access lags for multiple workers
Overall, 63% of workers ages 21 to 64 have access to an employer-sponsored retirement plan, and 62% participate in some form of retirement savings.
But these statistics hide deep disparities.
Hispanic workers face a subsidy rate of only 47%, compared to 68% for white workers. Only 43% of Hispanic workers participate in any retirement plan. Black and African American workers participate at rates of 54% and 69%, respectively.
Education and income drive even greater gaps. Only 34% of low-wage workers and 20% of wage earners have access to a workplace program, and only 30% participate.
Among high earners, 82% have access and 87% participate.
Workers with a high school diploma or less participate at 41%, compared to 75% of college graduates and 86% of those with graduate degrees.
Savings fall short of targets
Among workers with defined contribution balances, the average savings stood at $40,000 in December 2022.
But when you include all workers — even those who didn’t save anything — the median drops to just $955.
Using HonestyAge-based savings targets — which recommend having the same amount of annual per capita income saved by age 30 and 10 times that amount by age 67 — researchers found the average worker falls far short of. The average worker has saved just 4% of their goal in retirement accounts.
Even among those with good savings, the average worker only reached 18% of their goal. No population group reached even one quarter of the median savings target.
Student debt creates competitive pressures
Research has found a complex interplay between student loan debt and retirement savings.
Employees with student debt are more likely to access workplace programs (70% vs. 58%) and more likely to participate (69% vs. 62%).
And they are less likely to have zero retirement balances.
“Going to college and mounting student loan debt appears to help many find jobs with decent wages and benefits, but it also lowers their worth and possibly reduces their retirement savings,” the report explains.
Industry gaps persist
Retirement plan funding varies greatly by industry.
Public administration leads at 87%, followed by finance and insurance at 83%, and education at 81%. At the bottom, agriculture stands at 24%, accommodation and food at 29%, and other services at 36%.
Participation rates follow similar patterns, with housing and food services at 22% and agriculture at 39%.
Among employees who participate in defined contribution plans, the average employee contribution rate is 5.3% of earnings, while employers contribute an average of 2.7%. Total contributions average 8.4%.
Cash withdrawal, home loan
Only 4.7% of workers withdrew from their contribution accounts in 2022.
Older workers aged 55 to 64 are 8% more likely to withdraw. Among those withdrawing money, the average amount represents about 20% of their balance.
Sum withdrawals from any retirement plan remain rare at 1.6% of workers, although Hispanic and Black workers are more likely to take them at 2.9% and 2.3%, respectively.
About 80% of seniors live in someone’s home, but nearly one-quarter carry mortgage debt into retirement. Of those with mortgages, they represent 86% of total debt on average.
