The average American worker has less than $1,000 saved for retirement, underscoring the financial strain millions could face in old age, according to a new report from the National Institute on Retirement Security.

That figure factors in workers with 401(k) and other retirement plan savings, while also including the roughly 56 million U.S. workers who lack access to an employer-sponsored retirement plan. Median savings for all employed adults between the ages of 21 and 64 amounted to $955, the nonpartisan think tank found, tapping data from the U.S. Census Bureau’s Survey of Income and Program Participation.

For workers who do have retirement savings, the median balance stands at $40,000, the group found — a far cry from the roughly $1.5 million that Americans say they need to retire comfortably. Adding to the financial pinch is Social Security’s funding shortfall, which if not addressed by Congress could result in a roughly 20% cut to benefits starting in 2034.

“While there have been some noticeable improvements in the retirement savings system in recent years, many workers are still left out of that system, and major challenges lie ahead,” the report noted. 

More seniors are “unretiring,” or returning to the workforce after retirement for financial reasons, according to a new report from the AARP. The group, which represents the interests of older Americans, found in a survey that 7% of retirees have returned to work in the last six months, with almost half citing financial pressures. 

“With the cost of living still high and many people worried that they don’t have enough saved for retirement, the trend of older adults working longer will likely continue,” Carly Roszkowski, vice president of financial resilience programming at AARP, said in a statement.

The findings come as the Trump administration is rolling out so-called Trump Accounts, aimed at helping millions of children build a nest egg to eventually buy a home, fund their education or start a business. The accounts could also be used to help save for retirement, Treasury Secretary Scott Bessent has said.

While Trump Accounts could benefit future workers, the current retirement system effectively excludes millions of Americans who lack access to 401(k)s and similar plans, according to the National Institute on Retirement Security (NIRS), a nonprofit group whose members include financial services firms, employee benefit plans, trade associations and other retirement service providers.

“The bottom line is that if Americans are not saving for retirement through their employer, then they are probably not saving at all,” the report said.

The paltry level of retirement savings may also help explain rising poverty among older Americans. The share of seniors living in poverty climbed to 15% in 2024, up from 14% a year earlier and the highest rate among all age groups, Census data shows.

Few workers reach retirement benchmarks

The analysis, which also examined savings by age group, found that many older workers are no closer to their savings targets than younger workers, who have more time to catch up. 

The rule of thumb is that people should have retirement savings worth one year of their annual income by age 30, then double that by age 35, and rising from there, according to Fidelity. By 60, the typical worker should have eight times their annual income socked away for their golden years. 

Workers ages 55 to 64 had accumulated only 19% of their targeted retirement savings in 401(k)s or similar plans, NIRS found.

Urgent fix needed for Social Security

Given the meager retirement savings of millions of Americans, Social Security remains an increasingly important source for keeping seniors financially stable and out of poverty. 

Many workers also misunderstand Social Security’s role in retirement, either overestimating or underestimating its importance, experts note. A 2025 survey by life insurer Allianz found that 1 in 5 Americans believe Social Security will provide all the income they need in retirement, when in fact it provides roughly half of the typical senior’s annual income, according to NIRS.

Given that millions of seniors rely on Social Security for more than half of their annual income, shoring up the program to avoid insolvency is a pressing issue, the report said. 

Lawmakers could address the program’s funding gap by raising the payroll tax rate, increasing the retirement age or lifting the current cap on earnings subject to the payroll tax, which in 2026 is set at $184,500. Income above that threshold is not subject to Social Security taxes.

Without a fix, the resulting 20% reduction in benefits “would have a significant impact on the lives of seniors and other beneficiaries,” NIRS said.