Why So Many Americans Can't Afford to Retire

From the hardware store to the supermarket to the front seat of a rideshare car, you're now more likely than you've been in a generation to have an experience at a business provided by someone in their late sixties or seventies. Some are doing it for the social connection, or just the structure. But many of them are doing it because without the paycheck, they'd be flat broke.

In 2025, almost one in five Americans over 65 are still in the labor force, either working or seeking work. Compare that to about one in eight Americans in that age group at the turn of the century. The number of employed people over 65 has increased by more than 33% over the last ten years. But underlying that silent transformation is the largest money story happening in this country right now, and it has almost nothing to do with people genuinely wanting to keep their jobs.

Why are people 65+ still working?

The answer is a mix and it's worth being fair to it. Part of the story is the allure of continued work. Work can provide purpose, social interaction and a sense of structure that retirement may lack. Older Americans are healthier and live longer than past generations, so being physically capable of working a full day at 68 is now a viable reality.

Nevertheless, the main driving factor is financial need. For a large part of the older population who are still employed, their salaries are not just additional income, they're what separates making rent payments from being on the street. The type of work these older people are doing is also a significant tell: nearly 38% of employed individuals 65 and older work part time, far more than their younger counterparts. That looks less like a rewarding, fulfilling second career than it looks like topping off an insufficient income to meet basic expenses.

How much money have they saved?

The reality is pretty bleak. Among households aged 65 to 74 that have any retirement savings at all, the median balance is about $200,000, according to the Federal Reserve's Survey of Consumer Finances. At first glance that seems to be a good cushion, but consider a life span of 20 to 30 more years; $200,000 will be consumed surprisingly quickly. At a rate of 4% of savings each year, a $200,000 portfolio will yield approximately $8,000 each year, or just under $700 per month.

And that median is a flattering way to look at it, because it counts only the households that actually have a retirement account. Plenty don't. The same Federal Reserve data show that close to half of all US households have no retirement savings account at all. These families don't have "modest" or "small" retirement savings; they have none. For them, "retirement" is a number, not a financial plan.

So what about Social Security?

Social Security was never intended to be a full income source but a supplement that keeps people above the poverty line, and this misconception is the source of many people's woes. The average monthly retirement benefit in 2026 is about $2,071, or approximately $24,850 annually pre-tax. This sum has to provide for food, housing, utilities and medical expenses that can be quite significant in older age.

Social Security's role is substantial. According to the Social Security Administration, about half of people aged 65 and older live in households that get at least half of their income from Social Security, and roughly one in four rely on it for 90% or more. For millions of people, this is not a supplement on top of savings; it is very nearly the whole income. What it does not do is provide a way to live an independent life without the struggle that often accompanies aging. Without savings, even the bare minimum monthly check has to be stretched, and a part-time job is the logical means to patch the deficit.

Who is most affected?

Not everyone faces the same financial hardship; women carry a larger share of the burden. Survey data from the Transamerica Center for Retirement Studies shows that women hold only about half of what men have in median household retirement savings: $56,000 versus $92,000. The accumulation of this gap is the product of years of the wage gap, fewer working years for women who take time to raise children or care for elderly parents, and the consequent lower Social Security benefit.

Then comes the saddest part of the math. Women tend to live several years longer than men, so the group that reaches retirement with the smaller pot is also the group that has to make it last the longest. That single mismatch is a big reason the poorest members of the oldest generation are so often women living alone.

Crisis or choice?

It's fair to question claims of pure doom, because the facts aren't one-sided. Older Americans are living longer, are better educated and hold more office jobs that can be maintained well into their later years. Many choose to keep working because they can and want to. That trend is genuinely positive, and it is part of the rise.

Unfortunately, these two scenarios, the positive and the negative, are playing out at the same time to different people. The retired executive who consults twice a week for fun and the 72-year-old who needs to restock shelves because the rent went up occupy the same line in a statistical table. These two lives diverge sharply, and the number of people with little or no retirement savings tells you which side of the divide is growing. The same hardship people of all ages feel as wages fail to keep pace with everyday costs does not cease to exist once you've turned 65. It follows you into the years you were promised you could rest.

What it all means for your money

For those still far from retirement, the lesson is unglamorous but powerful: it is time, not income, that matters most in building savings. A small sum invested in your twenties and thirties builds wealth far more effectively over decades than a much larger sum scrambled together in your fifties, thanks to the power of compounding. The households now holding nothing did not, in the vast majority of cases, plan to be there. Expenses ran high, emergencies hit, and "I'll start next year" became twenty next years.

If you are closer to retirement, your options are narrower but no less real. Delaying Social Security where you can raises the monthly benefit for the rest of your life. Clearing high-interest debt before you stop earning protects a fixed income from being drained. And being honest about the number you will actually live on beats hoping it works out. None of that is exciting. It is the difference between choosing to work at 70 and being forced to.

The image of a comfortable, fully funded retirement was sold to a couple of generations as the natural reward for a working life. For a growing share of older Americans, it is turning into something they have to keep clocking in to afford. The smiling greeter in your local store and the driver of the car you're riding in are not anomalies. They are the early shape of what retirement increasingly looks like.