Employees Exhibit Low Confidence in Retirement Preparedness

Employees may be uncertain about the timing of their retirement, but employers can help encourage them to prepare for the unknown, according to the U.S. segment of State Street Investment Management’s “Global Retirement Reality Report.”

Only 24% of pre-retiree respondents to a State Street survey reported feeling very or extremely confident in their ability to fully retire, and just 21% said they felt optimistic about their financial preparedness for retirement. Meanwhile, 31% of retirees surveyed said they felt extremely or very financially prepared for the future before they retired.

Among retirees who reported feeling unprepared, 59% attributed their hesitations to concerns about unexpected costs, such as medical expenses, and 52% cited insufficient saving. In addition, just over one-third of retirees said they stopped working when planned, while 58% reported retiring early, most often for health reasons. Women were more likely than men to cite employment challenges and caregiving responsibilities as reasons for stopping work sooner than planned, and were less likely to say they had saved enough to be able to retire sooner than expected.

Shifting the Goal Post

State Street’s survey also demonstrated that retirement expectations can change quickly. Nearly one-third of pre-retirees said they had revised their retirement outlook in the past six months; of those who did, 72% said they now expected to work longer, either full- or part-time.

“There’s a lot of fluidity in retirement [today],” says Brendan Curren, State Street’s head of U.S. retirement. “There’s a glass-half-full element [in which] people are getting to retire when they want. … The glass-half-empty version is that [many] people are forced into retirement because of structural changes in their career or [for] health reasons.”

Another study released this month showed some U.S. adults have altered their definition of retirement, whether on their own accord or not. F&G Annuities & Life Inc.’s Retirement Reconsidered survey found that 51% of pre-retirees reported planning to semi—but not fully—retire. In addition, about 75% of pre-retirees said they have considered or are delaying their retirement date, up from 70% who said so in 2025.

More than half (53%) of respondents to F&G’s study agreed the journey to retirement is “becoming more flexible,” and 60% of pre-retirees said they viewed retirement as a “gradual transition over time” rather than a “single milestone.” Only 21% of pre-retirees said they associated retirement with “stopping work completely.”

Employer Support

While State Street’s report signaled employees have low retirement confidence, it also revealed that confidence in money management may conceal an underlying retirement planning gap. Three-quarters of respondents to State Street’s survey said they felt confident managing their finances, including 80% of retirees and 72% of pre-retirees. However, only 41% of respondents said they have, or are developing, a retirement plan.

Money management preferences varied by life stage, with about half of retiree respondents to State Street’s survey preferring to manage their finances themselves, and nearly half of pre-retirees favoring professional guidance.

“A stronger retirement experience must support different levels of engagement,” State Street’s report stated. “Both need simple language, decision support and a focused set of choices that still works when retirement begins unexpectedly.”

The State Street report also suggested plan sponsors provide an “adaptable income framework” to help employees navigate uncertain transitions, weigh their income sources, and “balance predictability with control.” Nearly half of respondents stated they believe employer-sponsored plans should support both saving and retirement income. There was clear interest in—but not commitment to—a specific guaranteed income product.

“By combining an intuitive participant experience with meaningful income and the flexibility to adapt to individual circumstances, plan sponsors can better support participants before, during and after retirement,” State Street’s report stated.

On behalf of State Street, data analytics firm YouGov fielded responses online in July among 4,040 U.S. adults at least 45 years old. The sample included 2,447 employed pre-retirees, 1,593 retirees and 811 union members, each of which participated or reported having participated in a 401(k) or 403(b) plan.