Most Americans don't have enough money saved for retirement. While you may assume this is a problem plaguing only the middle class and low-wage workers, a report from the New School indicates this isn't the case. Even wealthy Americans are falling far short of saving the funds they'll need for their later years. 

Millions of high earners are still struggling to save enough

According to the New School, a shocking 27% of workers with incomes above the Social Security wage base limit have no retirement savings. The wage base limit is $137,700 in 2020, so that means over a quarter of workers earning six figures haven't been able to invest any money for the future.

A worried-looking young man with money flying out of his wallet.

Image source: Getty Images.

Other high earners aren't necessarily flush with retirement cash either. In fact, among workers with incomes above $137,700 who do have retirement investments, the average amount they're projected to have by age 65 is only $252,000. This would last just two years if they maintained their standard of living in retirement. 

Sadly, for those with higher incomes, Social Security replaces a smaller portion of pre-retirement earnings than it does for lower-income workers since the benefits formula is progressive.

This means higher-earning Americans are likely to experience a greater decline in their standard of living if they retire without enough money in the bank.

Saving for retirement is a challenge for everyone

If your income isn't above $137,700, you may have a hard time feeling sorry for those who earn so much but still can't save.

The reality is, however, that people who earn income above the Social Security wage base limit can still struggle to make ends meet. Many live in high cost-of-living areas as jobs that provide these higher wages are often concentrated there. It's also a natural human instinct to increase spending as income rises. Often, by the time people realize they're getting in over their heads, they've committed to obligations it's difficult to eliminate. 

The challenges high earners face also underscore the difficulties lower and middle-income workers have. After all, if people making more than $137,000 a year still can't save, what chance do those earning far less have? 

But it's a challenge that needs to be overcome

No matter what your income level, the reality is that you're going to need retirement savings because you can't live on Social Security alone -- and you're going to have to find a way to make that happen. 

The first step to doing that is to figure out where you currently stand and where you need to end up. Start by:

  • Tracking spending to see where your money is going.
  • Setting a retirement savings goal.
  • Making a budget that prioritizes investing enough to hit your target.

When you make your budget and treat retirement savings as a must-pay bill, you can see how much spending you need to cut elsewhere. You may find there are changes you can make, especially if you're earning six figures. Sometimes, these modifications mean big lifestyle shifts, such as opting for a cheaper used vehicle or downsizing your home. But be open to them, because saving for retirement is something you absolutely must do. 

And if you discover you really can't find wiggle room to save for retirement, other options, such as working overtime, finding a side gig, or doing some career development, need to be on the table. 

There's no denying these steps will be a major challenge, especially if your income is well below that of the 27% of high earners who haven't been able to cobble together any retirement savings. But it's worth rising to it to ensure the secure retirement you deserve.