Most workers over age 40 don’t have sufficient retirement savings and aren’t setting aside enough to catch up, according to a survey from the Insured Retirement Institute.

Despite the nest egg shortfall, many still expect to retire early and believe they will have ample retirement income.  

More than half of older Americans have less than $50,000 for retirement. But the majority aren’t increasing savings to boost their nest eggs.

Nearly six in 10 workers save less than 10% of their income and a third set aside less than 5%, the survey revealed.

Moreover, many have unrealistic plans, with 46% planning to leave the workforce at age 65 or earlier, and workers’ expectations for future income don’t align with current savings.

More than one-half of workers think they will need more than $55,000 per year, and one-third expects to need in excess of $75,000, survey responses show.

“It’s something we see fairly consistently whenever we research the retirement readiness of American workers,” said Frank O’Connor, vice-president of research and outreach at the Insured Retirement Institute.

While the survey doesn’t examine the reasons for the workers’ attitudes, seeing their parents’ stable retirement — which may include pension income — may be skewing their views, O’Connor said. 

Although 67% of private industry employees have company-provided retirement plans, workers are increasingly less likely to have access to a pension, according to the Bureau of Labor and Statistics. 

Since most of today’s workers can’t rely on a pension, workers need to prioritize savings and may need to delay Social Security for higher payments, O’Connor said. But the survey shows many employees aren’t taking that approach.

“That’s a pretty perfect storm in a pretty bad way for a lot of folks,” he said. 

If someone expects to retire early or wants a specific income in retirement, they may consider working with a financial advisor to crunch the numbers, he said. 

Additionally, workers may soon get estimates from 401(k) plan providers showing the estimated monthly income from their nest egg, which may be a “wake-up call for a lot of folks,” O’Connor said.

In the meantime, someone may plug their savings into an online retirement calculator for a rough gauge. However, some calculators may be overly simplistic, failing to account for long-term care expenses and other factors, he said. 

Still, seeing the estimates, such as projected retirement income, may motivate some workers to ratchet up savings, O’Connor said.

“There are plenty of folks in this study that still have a good amount of time to build savings,” he added.

The Retirement Readiness Among Older Workers 2021 report is based on an online survey of 990 American respondents from ages 40 to 73 years old working part-time or full-time in March 2021. The findings reflect responses across all age cohorts.