Americans 55+ Have $500K Saved , But Need Twice That to Retire

"Americans are watching their 401(k) balances tick upward and feeling a false sense of security. The numbers look good on paper, but beneath the surface, a dangerous illusion is taking hold. While account balances grow nominally, the actual purchasing power needed for retirement is slipping further out of reach. The disconnect starts with savings behavior. Over the past 16 months, the personal savings rate has collapsed from 6.2% in Q1 2024 to just 4.2% in Q3 2025."

"Healthcare and housing are quietly devouring retirement security. From January to November 2025, these two categories alone grew by $346 billion, accounting for 36.5% of total spending growth. Healthcare spending surged 6.9% while housing climbed 2.9%. Together, healthcare and housing now represent 35.1% of total consumer spending. These aren't discretionary expenses you can cut in retirement. You can't downsize your way out of healthcare costs or negotiate away housing inflation."

"Yet most retirement calculators assume you'll spend 70-80% of your pre-retirement income, ignoring that the most expensive categories grow faster than overall inflation. The math gets worse when you factor in inflation's compound effect. Core PCE inflation, the Fed's preferred measure, sits at 1.82% year-over-year. That sounds manageable until you realize a retiree with $500,000 in savings loses meaningful purchasing power every year. Even at this "moderate" rate, your nest egg buys less each month."

Nominal retirement account balances have increased while real purchasing power declines. The personal savings rate fell from 6.2% in Q1 2024 to 4.2% in Q3 2025, producing $376 billion less saved annually despite a 6.3% rise in disposable income. Consumption now absorbs 92% of disposable income. Healthcare and housing grew by $346 billion from January to November 2025, representing 36.5% of spending growth and accounting for 35.1% of total consumer spending. Retirement calculators frequently assume 70–80% of pre-retirement income will be sufficient. Core PCE inflation at 1.82% compounds over time and reduces the purchasing power of savings.

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