TIAA Institute report: Most people share similar plans for retirement, but readiness varies widely by race and ethnicity

New State of Financial Preparedness Report shows most Americans have opened retirement accounts, but many don’t know how much money they’ve saved

NEW YORK, Jan. 25, 2024 – Large majorities of Americans of all races and ethnicities think about retirement in similar ways, calculating how much money they’ll need and how long they have to save it. But the similarities end there, as gaps emerge in savings rates, confidence in their retirement plans and other key measurements of retirement readiness.

Those are among the findings of the TIAA Institute’s new State of Financial Preparedness report. The research raises questions about whether coming generations of retirees will enjoy financial security, particularly as lifespans continue to lengthen, and a retirement crisis already exists.

The projections about future money needs vary little across demographics, but the way those plans unfold are significantly different.

Some key takeaways:

  • Overall, two thirds of Americans (67%) have at least some money invested in retirement accounts, but close to one in four don’t know how much they’ve saved. That’s true for 24% of retirees and 22% of those planning to retire.

    More than seven in 10 whites (76%) and Asian Americans/Pacific Islanders (71%) have retirements accounts, but that’s true for only about half of Black (49%) and Hispanic (52%) Americans. Many Hispanic (37%) and Black Americans (28%) who have not yet retired are unsure of how much they’ve saved, underscoring the significance of the uncertainty.
  • Fewer than half (47%) of those not yet retired are “very” or “somewhat” confident they’ll retire when planned. Those with the lowest confidence rates are Hispanic Americans and people ages 22-34 (each 37%).
  • Roughly 30% of whites and Asian Americans/Pacific Islanders have saved at least $250,000 for retirement. That’s almost twice as many as the number of Hispanic (17%) and Black Americans (16%).
  • One-fourth (26%) of Black Americans expect they’ll need some kind of paid employment for income during their retirement. That’s at least 10 percentage points higher than any other race or ethnicity.

“We’ve long talked about retiring inequality, but this new data does more to identify gaps, challenges and opportunities,” said Surya Kolluri, head of the TIAA Institute. “If most people are planning for retirement but can’t follow their plans, that’s a call to action for employers, policymakers, financial advisors, retirement services providers and others. We need to better identify the steps we must take to give people the resources they need.”

The report comes at a time when life expectancy has risen by 17 years since the Social Security program debuted in 1935 – meaning people could have longer retirements – but 40% of U.S. households already risk running short of money in retirement.

Besides retirement savings, there’s a big difference when measuring liquid, investable assets. Americans overall are more than twice as likely to have less than $50,000 (44%) as they are to have saved at least $500,000 (19%).

All told, 15% have no liquid investable assets, including one in four Black (26%), Native American (26%) and Hispanic (25%) Americans.

“While we see progress in some areas, our research will continue to provide deeper insight on many of the demographics that make America diverse,” Kolluri said. “That granular data will give fresh perspective, deeply informing the efforts underway to address our nation’s retirement crisis.”

The full report can be found on the TIAA Institute's website.

About the TIAA Institute

The TIAA Institute is a think-tank within TIAA, conducting cutting-edge research in the areas of financial literacy and longevity literacy, lifetime income, retirement plan design and behavioral finance in the context of retirement. The Institute provides consulting services for higher education and the broader nonprofit sector. For more information, visit www.tiaainstitute.org.

About TIAA

TIAA is a leading provider of secure retirements and outcome-focused investment solutions to millions of people and thousands of institutions. It is the #1 not-for-profit retirement market provider1, paid more than $5.6 billion in lifetime income to retired clients in 2022 and has $1.3 trillion in assets under management (as of 6/30/2023)2.

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1 As of July 21, 2022. Based on data in PLANSPONSOR's 403(b) 2022 DC Recordkeeping Survey, combined 457 and 403(b) data.

2 As of June 30, 2023 assets under management across Nuveen Investments affiliates and TIAA investment management teams are $1,284 billion.

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