The retirement savings gap is the difference between what Americans need to fund retirement and what they have actually saved—and it is widening. The Employee Benefit Research Institute (EBRI) projects that about 43% of U.S.
households will run short of money in retirement, a national shortfall near $4.1 trillion. You cannot single-handedly fix a national number, but you can shrink your own share of it. The average individual shortfall is roughly $48,000, according to EBRI—a gap most workers can narrow with higher contributions, better plan features, and a clear read on Social Security.
Table of Contents
- How big is the gap, and who carries it?
- Why Social Security makes the gap more urgent
- Use every dollar of contribution room
- Plan features that close the gap automatically
- Know your real number
- Frequently Asked Questions
How big is the gap, and who carries it?
The shortfall is not spread evenly. EBRI finds the risk is steeply income-stratified: about 73% of low-wealth workers are at risk of running short, versus roughly 40% of middle-wealth and 28% of high-wealth households. Account balances tell the same story.
In the Federal Reserve's 2022 Survey of Consumer Finances, median retirement-account holdings among households that had them ranged from about $18,880 for those under 35 to roughly $185,000 for ages 55–64. Those figures exclude the many households with no retirement account at all. Zero-savings is common. Bankrate's 2025 Retirement Savings Report finds a large share of Americans report nothing saved, with roughly a quarter holding under $10,000—concentrated among younger and lower-income workers.
Why Social Security makes the gap more urgent
social security is the floor most retirees stand on, and that floor is under stress. The Old-Age and Survivors Insurance (OASI) trust fund—the account that pays retirement benefits—is projected to deplete in 2033. After depletion, incoming payroll taxes would cover only about 77% of scheduled benefits, per the SSA 2025 Trustees Report.
That is an automatic cut of roughly 23% unless Congress acts. The longer view is similar. If the retirement and disability funds are combined, the Committee for a Responsible Federal Budget's analysis of the 2025 report puts depletion in 2034 with about a 19% cut, and a 75-year shortfall near $25 trillion. Plan as if a benefit reduction is possible, while recognizing lawmakers have historically acted before past deadlines.
Use every dollar of contribution room
Contribution limits are the most direct lever you control. For 2025 the IRS sets the 401(k) employee deferral limit at $23,500, with a standard catch-up of $7,500 for savers 50 and older.
A newer rule helps people close to retirement. Under SECURE 2.0, a "super catch-up" of $11,250 applies at ages 60 through 63—but only if your plan offers it, so confirm with your administrator.
- Capture the full employer match first; unmatched dollars are the easiest gap you can close.
- If you are 50+, layer the catch-up on top of the base limit.
- At ages 60–63, ask specifically whether the super catch-up is available.
- Raise your deferral rate by one point each year until you hit the limit.
Plan features that close the gap automatically
Individual willpower is not the only fix; how a plan is built matters. EBRI projects that auto-enrollment, auto-escalation, and auto-portability, combined with the SECURE 2.0 Saver's Match, could cut aggregate shortfalls by more than $200 billion. These features work because they change the default.
Auto-enrollment signs workers up unless they opt out; auto-escalation raises their rate over time; auto-portability moves small balances forward instead of cashing them out at job changes. If you run or influence a plan, adopting these defaults helps the workers least likely to sign up on their own. If you are a participant, do not opt out of them—and if you left a small balance at an old job, roll it into your current plan rather than cashing it.
Know your real number
Round targets can mislead. The widely repeated idea that people need about $1.5 million comes from sentiment surveys, not a regulator, as Bankrate notes in its retirement report—treat it as a mood reading, not a required goal.
Your real number depends on your spending, your Social Security benefit, and your other income. Start with your actual projected benefit rather than a headline figure. Create or sign in to your SSA Social Security Statement to see your personal estimate, then build your savings target around the gap it reveals.
Frequently Asked Questions
Will Social Security really be cut in 2033?
Without Congressional action, the OASI fund is projected to pay only about 77% of scheduled benefits after 2033, per the SSA 2025 Trustees Report. A change to the law before then could alter that outcome.
Is the "$1.5 million" retirement target accurate for me?
No single figure fits everyone. That number reflects survey sentiment, not a required target; your real goal depends on spending, Social Security, and other income.
What is the fastest way to close my own gap?
Capture your full employer match, then raise your deferral rate yearly and use any catch-up contributions you qualify for at 50+ or the super catch-up at ages 60–63.