Retirement Readiness Index: It’s a wake-up call, as ‘too few’ are prepared

With President Trump’s tariff announcements greatly impacting pension and 401(k) plans, now seems to be the perfect time for fintech pioneer IRALOGIX to launch its Retirement Readiness Index (IRRI) which measures Americans’ retirement preparedness. Its inaugural Q1 evaluation is a comprehensive national benchmark built to track Americans’ preparedness to retire with financial security and peace of mind.

The IRRI measures readiness across five critical dimensions: Savings and Investments, Healthcare Readiness, Lifestyle and Spending, Emotional Well-being, and Economic and Policy Confidence.

“This score is a wake-up call for America’s households, employers, and policymakers,” said Peter J. de Silva, CEO of IRALOGIX. “It’s not just a number, it’s a mirror held up to the financial anxieties, gaps in planning, and uncertainty that millions of Americans face as they approach one of life’s most important milestones: retirement. Our data shows that too few are prepared for both the financial and personal impact of aging-related issues, and are struggling with saving enough, planning for health care, and trusting that essential benefits like Social Security will be there when they need them. We believe the path to retirement readiness begins with awareness.”

When analyzing the results, each retirement readiness category was assigned a maximum number of points it could contribute to the overall Retirement Readiness Score. The lower the percentage, the further away Americans are from being fully prepared in that dimension.

Where Americans are falling short

Health care readiness: Out of a possible 15 points that Healthcare Readiness could contribute to the national score, Americans only reached 6.3 points. This equates to just 42.1% of the ideal score in this area, making it the lowest-performing dimension.

What this means: Many lack a solid plan to manage health care costs in retirement, especially long-term care, which can quickly erode savings. Key gaps were noted in uncertainty about whether Medicare will meet future needs, absence of a plan for handling unexpected medical expenses, and fear of financial ruin from chronic illness or elder care.

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Savings and investments: This category has the biggest influence on retirement readiness, with a maximum of 35 points available. Yet, respondents only realized 15.1 points, reaching just 43.2% of the potential in this crucial area.

What this means: Many are not saving enough or don’t know if their savings will last through retirement. Key gaps included low confidence in current savings, lack of a written retirement plan, and few respondents meeting regularly with financial advisors for retirement advice.

Lifestyle and spending: Out of 15 possible points, respondents only realized 6.97 points in this area. That’s just 46.5% of the potential, signaling that Americans are underprepared to manage day-to-day expenses in retirement.

What this means: Many Americans have not fully transitioned from an earning mindset to a spending and sustaining mindset for retirement or created a detailed retirement budget that accounts for inflation, health care, or changes in income sources. Key gaps were noted in a heavy dependence on non-guaranteed income sources, and concern that working during retirement will be necessary, not optional. Survey responses also suggest that pre-retirees are adjusting their definition of retirement. For many, they’re anticipating a retirement that includes part-time work, consulting, or phased retirement.

Where Americans show strength

Economic and policy confidence: Americans achieved 10.2 out of 20 possible points in this area, making it the highest among all categories, though still well below ideal.

What this means: There’s moderate confidence in navigating future economic and policy changes, but inflation remains a major concern. Notable insights included that half of the respondents expect Social Security to remain intact, many are using tax-advantaged retirement savings tools, but not fully, and widespread concern that inflation will erode retirement savings.

Emotional well-being: Americans achieved 7.25 out of 15 points here, showing moderate preparedness for the emotional side of retirement.

What this means: While many respondents have strong social networks and plans for engaging in activities, others haven’t communicated their retirement plans with family, which can create stress down the line. Notable insights include positive scores in social support and hobbies and lower scores in family communication and transition planning.

“Retirement readiness is not just a personal issue, it’s a societal one,” said Peter de Silva. “When individuals are unprepared for retirement, the ripple effects are felt across families, workplaces, communities, and the broader economy. The IRRI was … designed to spark a national conversation, shine a light on the areas where Americans are falling short, and provide a roadmap to take action. With individuals facing longer lifespans, rising health care costs, and economic uncertainty, the IRRI will remind policymakers, employers, and financial institutions to work towards better solutions.”

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“The good news is that retirement readiness isn’t out of reach, but it does require action,” added Pete Littlejohn, President of IRALOGIX. “Americans can start by getting informed, setting clear goals, and using the tools available to them, from workplace retirement plans to personal savings and trusted financial advice. Preparation is power, and every step taken today helps build the confidence and security needed for tomorrow.”

“Creating a culture of saving and retirement readiness starts at the top,” adds de Silva. “Employers have a real chance to help employees build better financial habits, but it takes more than just offering a retirement plan. It starts with education. Financial wellness programs tailored to different life stages can help employees make smarter decisions about budgeting, managing debt, investing, and planning for retirement.

“Employers can also make saving easier with tools like automatic 401(k) enrollment, annual contribution increases, and clear employer matches. Offering Roth options and a range of investments gives people more flexibility to plan their future their way. And don’t underestimate the power of personal guidance. Tools that show employees where they stand – factoring in their savings, expected Social Security, and healthcare costs – can give them clarity and confidence.

“Finally, lead by example. Talk openly about saving. Celebrate wins like paying off debt or maxing out contributions. When leaders model good financial habits, employees notice, and they’re more likely to follow. Saving for the future doesn’t just happen. But with the right support, tools, and leadership, employers can make a lasting difference.”

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Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.