Survey: Only 5% of Retirees Feel ‘Living the Dream’

A recent survey conducted by Schroders reveals a stark reality for retirees in the United States, with only 5% claiming they are “living the dream.” In contrast, a concerning 19% describe their retirement as a “nightmare.” This survey, part of the 2025 U.S. Retirement Survey, highlights the financial struggles many face as they transition into this new phase of life.

The findings underscore a significant gap between the perceived requirements for a comfortable retirement and the reality many retirees experience. According to research by Northwestern Mutual, the average individual believes they will need approximately $1.26 million to retire comfortably. Yet, Fidelity reports that the average 401(k) balance for those aged 70 and above stands at only $250,000. This disparity raises concerns about the adequacy of retirement savings for many seniors.

Understanding Retirement Challenges

The survey indicates that financial stress stems from several key factors, including inflation, healthcare costs, and uncertainty regarding the longevity of savings. Over 80% of respondents express anxiety over rising costs that are diminishing their purchasing power. Nearly 50% admit their daily expenses during retirement have exceeded expectations.

Healthcare expenses pose another significant challenge. Many retirees report being compelled to retire earlier than planned due to health crises. The average cost of healthcare for a single individual aged 65 retiring in 2025 is projected to be around $172,500. It is noteworthy that retirees allocate an average of 15% of their income to medical expenses, with more than half expecting Medicare to cover a larger portion of their costs than it typically does.

To mitigate these challenges, long-term care insurance can be beneficial. Such insurance can help cover expenses associated with in-home care, nursing homes, and assisted living facilities. Various providers, such as GoldenCare, offer tailored plans to meet individual needs.

Strategies for a Secure Retirement

For those who have not yet retired, proactive planning is essential. Financial experts advise determining one’s retirement number—an estimate of the amount needed to sustain a desired lifestyle. A common guideline suggests saving at least ten times one’s annual salary or calculating expected yearly expenses multiplied by 25. For instance, if an individual aims for $80,000 annually in retirement, they should ideally target a nest egg of $2 million.

Once retirement goals are established, breaking them down into manageable milestones can facilitate progress. Even modest, consistent savings can accumulate significantly over time due to the effects of compound growth. It is crucial to utilize the right accounts for savings. Prioritizing a 401(k) with employer matching contributions, followed by Individual Retirement Accounts (IRAs) such as Roth IRAs, can provide a solid foundation for retirement savings.

Seeking the guidance of a financial advisor is also a prudent step. Advisors can assist in crafting a plan that considers taxes, market risks, and unforeseen expenses. Many advisory services connect individuals with fiduciaries who are legally obligated to act in their best interests.

In addition to savings, having an emergency fund in a highly liquid account can offer protection against financial uncertainties. Institutions like SoFi provide fee-free banking services, allowing individuals to earn competitive interest rates on both checking and savings accounts while ensuring deposits are insured.

Another innovative approach to building retirement savings includes utilizing robo-advisors like Acorns, which help investors automatically round up purchases to the nearest dollar and invest the difference. This method allows even small amounts to contribute to a diversified investment portfolio.

The Schroders survey serves as a crucial reminder that planning for retirement involves more than just reaching a financial target. It requires careful consideration of the potential realities that could disrupt even the most well-prepared plans. With inflation, healthcare expenses, and various uncertainties impacting today’s retirees, adopting a comprehensive and adaptable approach to retirement planning is more critical than ever.