Senior Americans are heading back to work
Americans across generations are far behind on retirement savings. Baby Boomers are $870,000 short, Gen X falls short by $1.45 million, and Millennials/Gen Z face similar shortfalls of around $1.59 million each. Pexels

Pressured by rising living costs in the US, at least one in five older Americans on fixed incomes are forced to consider returning to work.

While some retirees may choose to re-enter the workforce for social reasons, many are driven by financial necessity. According to a Pew Research Center report, nearly one in five Americans over 65 are still employed, translating to roughly 11 million people.

So the million-dollar question is: How much does one truly need to save to achieve a secure retirement where one doesn't feel the need to go back to the workforce?

Rising Cost Of Living

Like many Americans over 65, Joyce Fleming thought her working days were over when she retired as a nurse in 2019. But a few years later, a spike in grocery bills and utilities forced the now 70-year-old back into the workforce to make ends meet.

The price of everyday essentials, car ownership, insurance, and housing have soared in the last few years, driven by rampant inflation. Faced with these rising costs, Joyce, like many retirees, realized her fixed retirement income was no longer sufficient to maintain her desired lifestyle.

Rising costs are making it harder for many Americans to afford groceries, with some reportedly going into debt to buy food. Joyce's story is a microcosm of a more significant trend.

According to a 2024 survey by, approximately 6.25 million Americans, or one in eight retirees, are planning to return to work this year, and the number is expected to surge dramatically.

And as per the employment site Indeed, roughly 3% of the approximately 50 million retirees in the US rejoined the workforce in 2023.

However, the survey predicts this number to skyrocket to over 12.5%, translating to over 6 million retirees. This drastic increase is attributed to multiple factors, including rising living costs, dwindling savings, and accumulated debt.

During the pandemic, Joyce took time off to care for her grandchildren, adding to the financial strain. Now, facing mounting expenses, she returned to work as a call centre operator at a local amusement park.

"That really didn't pay much at all. And plus, it was a lot of travel. I then took another job as a nurse, and I worked in that for a while, but right now I'm looking for something more locally," she told Fox & Friends.

A record number, 4.1 million Americans, will reach the usual retirement age of 65 this year, but a significant portion will likely continue working. This represents a significant increase compared to the late 1980s and early 2000s when only 10% of those over 65 worked.

While unforeseen expenses like caring for elderly parents or adult children have always been a concern for retirees, the current economic climate presents unique challenges. Retirees increasingly need to be more aware of the surging cost of living as rampant inflation significantly affects their retirement savings. So, how much is truly necessary to navigate these unforeseen circumstances and achieve a secure retirement?

Comfortable Nest Egg

The reality of rising living costs paints a sobering picture for retirement planning. A recent study by GOBankingRates found that even a $1 million retirement nest egg can be depleted in just over ten years in some states. Nowhere in the US would such savings last longer than 22 years, underscoring the importance of careful planning to ensure a secure retirement.

Whether that means maintaining your current lifestyle or travelling extensively, planning for a secure retirement requires a clear understanding of your financial needs. This can be incredibly challenging for younger generations, as a 2023 report highlights the need for more preparedness among Gen Z and millennials.

According to a new report by Northwestern Mutual, Americans' "magic number" for a comfortable retirement has skyrocketed to a record high. While their retirement aspirations are climbing, the amount they have saved is, unfortunately, dwindling.

The study hints at a sobering reality: the average American has a mere $88,400 saved for retirement, a monumental $1.37 million short of their perceived goal. This highlights a significant disconnect between expectations and reality.

The savings gap identified by the Northwestern Mutual study is particularly concerning when considering the monthly savings required to reach the desired retirement nest egg. To hit the $1.46 million target, a 50-year-old must save a significant $4,586 monthly.

This number is reduced to $1,792 for a 40-year-old, but it remains a substantial hurdle. For younger adults, however, the challenge appears more manageable. A 30-year-old would need to save $805 monthly, and someone starting at age 20 could reach their goal with $382 saved each month.

While the monthly targets decrease with an earlier start, they still represent a significant commitment for many. This year, over four million Americans will turn 65. However, there is a considerable gap between retirement goals and reality among the generations on the verge of retiring.

Retirement Savings Shortfall By Generation

Many Americans need help with retirement savings and their desired retirement nest egg. Here's how they fare, according to Axios and research group Ipsos:

Baby Boomers: On average, they have saved $120,300, falling short of their $990,000 target by $870,000.

Gen X: Their average nest egg is $108,600, far below their desired $1.56 million, leaving a $1.45 million shortfall.

Millennials and Gen Z: Both generations face similar gaps of around $1.59 million and $1.61 million, respectively.

However, Gen Z offers a glimmer of hope. Recognizing the importance of early saving, they typically begin saving at 22, almost a decade earlier than the average American (age 31). This earlier start and their expectation to retire at 60 suggests a potentially brighter retirement outlook for this younger generation.