A new report from Goldman Sachs Asset Management underscores the mounting pressure on American workers and retirees, painting a sobering picture of how inflation, rising living expenses, and structural demographic changes are reshaping the retirement landscape. For advisors, the findings are both alarming and instructive—highlighting the need to rethink traditional approaches to retirement planning, portfolio construction, and client guidance.
The Retirement Squeeze Intensifies
According to Goldman Sachs, millions of Americans are caught in a bind. Rising costs are draining household budgets in the present, leaving little capacity to save for the future, while simultaneously pushing the expense of retirement to unprecedented levels. The dual effect is that workers feel squeezed today and face a more daunting financial burden tomorrow.
The data are stark. Goldman’s analysis reveals that 40% of working Americans now live paycheck-to-paycheck, with another two-fifths reporting they are not making meaningful progress toward their retirement goals. For advisors, that statistic underscores the challenge of convincing clients to prioritize long-term savings when short-term affordability is at risk.
Retirees are not insulated from these pressures. Americans are living longer, and healthcare and lifestyle expenses continue to rise. Goldman estimates that the cost of retirement has been growing at roughly 4% annually for the past 25 years—outpacing inflation and eroding the effectiveness of conventional savings strategies. If current trends persist, by 2033 more than half of American households could be living paycheck-to-paycheck, while the projected cost of retirement climbs from $1.1 million in 2023 to an estimated $1.7 million.
For advisors, these numbers shift the conversation with clients away from simple accumulation strategies and toward comprehensive, multi-dimensional planning that accounts for inflation, longevity, and market volatility.
Changing Household Economics
One of the most notable findings from Goldman’s report is the shifting weight of household expenses. The share of after-tax income consumed by housing, childcare, and healthcare has risen steadily, reshaping the financial equation for many families.
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Housing: Homeownership now consumes 51% of the median household’s after-tax income, compared with 33% at the start of the century. This rising cost has delayed the average age of first-time homeownership from 36 in 2002 to 56 today.
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Childcare: The cost of raising children now represents 18% of median household budgets, crowding out the ability to save.
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Healthcare: At 16% of after-tax income, healthcare costs represent one of the most significant structural burdens for both workers and retirees.
These shifting cost dynamics are also influencing broader life decisions. Americans are delaying major milestones such as marriage, parenthood, and homeownership—all of which have knock-on effects on financial planning. For younger generations, this means less time for assets to compound, while for older clients, it creates more complex intergenerational planning needs.
Advisors should view these trends not just as headwinds, but as opportunities to differentiate through personalized guidance. Families struggling with trade-offs between retirement savings, college funding, and rising daily expenses require nuanced planning conversations that address multiple goals simultaneously.
The Catch-Up Conundrum
Goldman highlights a particularly troubling reality: the later clients fall behind in savings, the harder it becomes to bridge the gap. Missing early contributions means missing out on compounding, making catch-up strategies less effective.
This challenge is about to become more pronounced. Starting in 2026, new federal rules will restrict catch-up contributions to 401(k)s for workers over age 50 who earn more than $145,000. For higher-earning clients in their peak saving years, this change could significantly constrain retirement planning flexibility.
Advisors must prepare now to discuss supplemental vehicles and tax-efficient strategies that can fill the gap. For high earners, this could mean revisiting nonqualified deferred compensation plans, taxable brokerage accounts, Roth conversions, or strategies that involve life insurance and annuities as retirement income complements.
Opportunities in Plan Design and Access
Despite the challenges, Goldman’s report points to opportunities for policy and practice that could improve outcomes. The firm highlights several areas where advisors can play an active role in guiding clients and employers:
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Workplace Plans: Employees with access to 401(k) or other workplace-sponsored retirement plans demonstrate higher savings rates than those without. Goldman estimates that consistent participation in an employer-sponsored 401(k) can boost savings by nearly 30% by retirement age. Advisors serving corporate retirement plans should emphasize auto-enrollment, auto-escalation, and expanded eligibility as key plan design features.
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Dedicated Accounts for Children: Proposals such as “Trump Accounts”—a savings vehicle created under recent legislation for children born before 2029—illustrate how early contributions can compound meaningfully. Even modest annual deposits of $500 until age 21 could increase lifetime savings by roughly 14%. For advisors, these vehicles present an opportunity to educate clients about multi-generational wealth strategies and the power of early investing.
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Alternative Investments: Goldman suggests that diversifying into private markets may boost returns and strengthen retirement portfolios. With potential regulatory changes opening access to private equity, private credit, and even cryptocurrencies within retirement accounts, advisors should be prepared to assess suitability, manage risk, and educate clients on the liquidity and complexity of these vehicles.
The Expense Problem: Beyond CPI
Perhaps the most critical takeaway for advisors is that the affordability crisis cannot be solved simply by encouraging higher savings rates. The structural rise in costs—particularly in housing, healthcare, childcare, and education—continues to outpace headline inflation and wage growth.
Goldman emphasizes that this is not a temporary flare-up tied to cyclical inflation but rather a long-term structural trend. For advisors, this underscores the importance of modeling retirement needs with more realistic assumptions about expense growth. A flat 2% or 3% inflation assumption may not be adequate for long-term planning; instead, advisors may need to model higher inflation for specific categories such as healthcare and education while considering geographic and lifestyle-specific cost drivers.
Actionable Insights for Advisors
The report serves as a wake-up call for the wealth management industry. Advisors who want to remain indispensable to clients in this environment must adapt strategies and conversations accordingly. Here are several areas where advisors can add value:
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Holistic Planning: Move beyond accumulation and incorporate longevity, healthcare, housing, and multi-generational needs into planning models.
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Scenario Analysis: Stress test portfolios for higher-than-expected inflation, delayed retirement ages, and lower-than-expected returns.
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Behavioral Coaching: Many clients delay savings due to near-term financial stress. Advisors can help by reframing savings as non-discretionary, automating contributions, and breaking large goals into smaller, achievable steps.
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Tax-Efficient Withdrawals: Rising retirement costs increase the need for precision in distribution planning. Advisors should revisit strategies for sequencing withdrawals, Roth conversions, and harvesting gains or losses.
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Retirement Income Innovation: Given the gap between rising costs and constrained savings, advisors may need to emphasize guaranteed income products, dynamic withdrawal strategies, and more diversified income sources.
A Shifting Narrative
Goldman’s findings reflect a profound shift in the narrative of retirement planning. The old guidance—“just save more”—is increasingly out of touch with the financial realities clients face. For many households, the issue is not a lack of discipline but a structural affordability crisis.
As Greg Wilson, head of retirement at Goldman Sachs Asset Management, put it: “These findings force us to ask a very critical question: Does the retirement math still work? The answer is no. Telling workers just to ‘save more’ ignores the realities they face.”
For wealth advisors and RIAs, the challenge is to navigate this new reality with creativity, empathy, and precision. The goal is no longer just helping clients accumulate assets, but guiding them through a world where the cost of living and the cost of retirement both continue to rise faster than incomes.
Advisors who can combine technical expertise with thoughtful guidance will not only help clients weather these challenges but also strengthen their role as trusted partners in an increasingly uncertain retirement landscape.
