Vol 3, Issue 9. Quarter 1 – 2026.

In October of 2025 a research group at Vanguard published their annual US Retirement Outlook which included ample commentary on readiness among those near retirement today. The full title of the report was, “The Vanguard Retirement Outlook: Strong National progress, opportunities ahead.”  This was announced in the financial press in some interesting ways. Here are a few headlines generated:

• “42% of Americans on Track for Retirement, per Vanguard”
• “Less than half of Americans are on track to maintain their current lifestyles in retirement, Vanguard says”
• “Less than half of Americans ready for retirement”

I suppose that this means that the report says things are pretty bad. I wondered what it really said, so I did a very strange thing. I actually read the report. Here are a few key elements.

1. Vanguard assumes that retirees seek to spend the same amount of money every year, from the age they retire until they die,
2. The report also assumes that all retirement spending comes from Social Security benefits, retirement plans, and other financial assets.
3. Success means that returns are enough for 90% of all considered cases.

Let’s consider these three elements in turn. First, ample research shows that spending does NOT increase, or stay the same (even when healthcare costs are included) in retirement. A recent paper by Michael Hurd and Susann Rohwedder  (Hurd and Rowhedder, 2023)  finds that annual spending declines by roughly 50% between the ages of 65 and 90. A good bit of this decline happens because many mortgages that exist at retirement are eventually paid off, causing a dramatic decrease in spending. However, even when that is ignored, spending tends to drop by about 1% per year. If this is true, then Andrew Biggs (See, Biggs, 2025) estimates that the typical household would be fine saving roughly half of what Vanguard defines as “adequate.”

Second, the Vanguard study considers income from Social Security, retirement plans, and “other financial assets”. However, “other financial assets” does not include earnings from employment, farm or business income, or transfer payments from other government programs. This is important because data from the US Federal Reserve shows that for households with a head over the age of 65, about 60% of them have at least some income from at least one of these other sources. To ignore this is to miss up to 1/3 of total income among retirees. I cannot say exactly what the level of “Income adequacy” would be if this were included, but clearly, it would be greater than Vanguard reports.

Third, about 90% of all retirees will live less than the age assumed in the Vanguard study. Stated simply, the life expectancy at the start of retirement is about 20 years, but Vanguard calculates success rates assuming that each person lives 10 years longer than that. I know that being “optimistic” in this way makes one feel better, but it also dramatically overestimates the share of people who will “outlive their money.”

An Alternative View of the “Crisis”

Here is another interesting tidbit from Andrew Biggs Book, “The Real Retirement Crisis”. I quote this paragraph directly to avoid my own mistakes.

“In a 2023 study, economists Peter Brady and Steven Bass of the Investment Company Institute used IRS data to track households’ incomes as they shifted from work into retirement, following them from age 55 to 72. . . show that for households at the 25^th percentile of the income distribution at age 55, average annual incomes do not drop at all between age 55 and 72.” 

That’s an intriguing conclusion because virtually all research (including that from Vanguard) indicates that those at higher levels of the income distribution do much better in retirement. So let’s add 2 and 2 here and see what we get.

1. For workers close to the poverty line (but a little above it) their incomes in retirement do not fall, but their spending does, and
2. For workers above this level, things look much better.

Exactly where is this retirement crisis again?

To be fair, the group that you are a part of does matter, and it can matter a lot. For example, Hurd and Rohwedder also found that 68% of individuals between the ages of 66 to 69 had sufficient resources to assure an at least 95% chance of maintaining their standard of living throughout retirement, and the numbers get better for younger people.

However, single individuals are far less likely to be prepared (51%) than married individuals (81%). Individuals with less than a high school diploma are less likely to be prepared (48%) compared to those with a college degree (81%).

Some Issues You Actually Need to Look Into

Please note that I am NOT saying that everything is rosy. Here are 3 real, systemic problems that I see, which are largely ignored in these works.

• Long-term care insurance needs to be standardized and easier to understand,
• Fraud among retirees and older investors is rampant, and
• Mortgage rates for retirees make many feel stuck in a more expensive home that is too big to maintain.

According to a famous study in the Journal of Economic Perspectives (Poterba, Venti, Wise, 2011) about 30% of people above the age of 72 who hold retirement accounts report taking NO withdrawal from that account in the last 12 months. This is interesting given that roughly 70% of those accounts had Required Minimum Distributions. This suggests that if older retirees are not literally forced to withdraw money from a retirement account, they simply won’t do it, and a big reason is that they are holding onto it just in case they need long term care.

According to the Federal Trade Commission, US consumers reported losing more than $12.5 billion to fraud in 2024, and this is a 25% increase over 2024. Of this amount, at least $3 billion of these losses appear to be among retirees. In addition to costing retirees a ton of money, it also makes them less likely to seek out professional advice, because they fear being ripped off.

Focusing on the third point on my list, it is particularly difficult for older people to get mortgages because most algorithms to approve mortgages begin with income levels. Many retirees report that while they have more than enough assets to pay cash for a home when they look to downsize, they would prefer to get a mortgage. When they find that they cannot get one, they simply stay in a house that is far larger than they need, and more expensive to maintain than they feel it is worth.

Here is the bottom line. Let’s not pretend that everything is perfect. But let’s also not act as though we are in the midst of a crisis when the data clearly shows that retirees are richer today in the US than anyplace else on earth at any time in history. You need a plan – but you don’t need to think that things are hopeless. We are here to help you walk through this in your own way.