The dreaded “financial vortex” is rearing its ugly head again. According to a report released today, almost three-quarters (74%) of Gen Z, Millennials and Gen X report struggling to save for retirement due to competing financial priorities, dubbed the “financial vortex.”
“The cost of major life events is taking up a larger percentage of household income, a trend that affects workers at the lowest level of income as well as the highest.”
Greg Wilson, Goldman Sachs Asset Management
The 2025 Goldman Sachs Asset Management Retirement Survey and Insights Report, “New Economics of Retirement,” also found 42% of younger working respondents (Gen Z, Millennials, and Gen X) state they are living paycheck to paycheck.
Looking at national trends for those who report living paycheck to paycheck, 55% of workers may be living paycheck to paycheck by 2033, and 65% by 2043, raising the question of whether retirement is growing unaffordable for many.
“The cost of major life events is taking up a larger percentage of household income, a trend that affects workers at the lowest level of income as well as the highest,” said Greg Wilson, Head of Retirement at Goldman Sachs Asset Management. “The ’save more’ strategy may be sufficient for some, but we believe many others will need to more thoughtfully use investment, advice, and retirement income strategies to close their savings gap. Otherwise, retirement may increasingly become unaffordable for too many workers.”
Far more younger workers are impacted by the financial vortex, which showed an uptick in impact in our latest survey data, following a few years of modest decline. Goldman Sachs coined the term “financial vortex” to describe a cycle of competing financial priorities and life events that make it difficult for people to save for long-term goals, like retirement. It’s a situation where economic and personal factors—such as high inflation, unexpected expenses, student loan payments, or expensive car loans—divert funds from savings, leading to increased debt and an inability to plan for the future.
On average, those saying their savings are materially constrained by the financial vortex:
• 31% of working Boomers
• 57% of Gen X
• 75% of Millennials
• 72% of Gen Z
Major life events also have a key impact on retirement savings. Notably, 66% of Gen Z and 59% of Millennials experienced at least one major life event—including buying a new home, divorce, marriage, sending a child to college—in the past 24 months. As a result, 70% of those with a life event either (i) paused retirement savings contributions, (ii) took a retirement-plan loan, or (iii) planned to retire later.
How costly are changes to savings and plans due to the financial vortex and/or life events on retirement? Illustrative calculations demonstrate how a saver can fall behind if they cannot balance these events effectively.
• 10-year late start to savings: -38% hit on retirement savings
• Out of work for eight years: -27%
• Early career cashout: -17%
• Early retirement at 62: -25%
• 1% lower investment return: -20%
• Multiple scenarios (over career): -43%
EDITOR’S NOTE: Goldman Sachs stresses these examples are for illustrative purposes only and are not actual results.
“Our survey makes the connection unmistakable: broad-based financial stability and retirement progress move in lockstep,” said Nancy DeRusso, Head of Financial Planning at Goldman Sachs Ayco. “We see a direct correlation between day-to-day financial resilience and staying on track for retirement. That’s why, when clients call to review their retirement plan, we routinely look beyond the portfolio—addressing budgeting habits, investment choices, and even how spousal accounts are coordinated. The takeaway is simple and powerful: financial stability is retirement stability.”
New economics of retirement
The report finds the retirement savings landscape is being reshaped by the growing savings gap driven by rising costs and the increasing number of competing financial priorities facing individuals and families. Additionally, as this trend is ongoing, it will likely continue to force workers to strike a finely tuned balance between their immediate financial needs and long-term planning.
Leveraging economic data beyond the participant survey, Goldman Sachs tracked the impact on retirement savers:
• The ratio of the cost of basic expenses to after-tax income has increased dramatically from 2000 to 2025, far outpacing median wage growth and leaving little to save for retirement. Examples include cost of home ownership, up from 33% to 51%; paid childcare, up from 12% to 18%; private college costs, up from 65% to 85%; and healthcare, up from 10% to 16%.
• Rising costs, among other factors, have contributed to significant shifts in life goals: The median age of first marriages increased (women from 25 to 29, men from 27 to 30), first-time home buyers was up from 31 to 38, and first-time mothers rose from 25 to 28.
• Life expectancy is longer and forecasted to increase: in 2000, the average unisex length of retirement was 17.5 years. In 2023, it was 19.2 years; by 2033 and 2043, it may be 20.4 and 21 years, respectively.
• The cost of retirement is outpacing inflation with expenditures among retirees from 2000-2023 rising at an annual rate of 3.6% compared to 2.6% for inflation (CPI) during the same period.
“Some say that life gets in the way of retirement savings, but workers should be able to enjoy life’s milestones and take on challenges without letting them derail their retirement plans,” said Chris Ceder, Senior Retirement Strategist at Goldman Sachs Asset Management. “That requires a new approach. We need to anticipate the growing challenges ahead and be willing to evaluate more solutions. By thoughtfully incorporating new investment strategies, potential income options, and practical behavioral changes, we can help close the savings gap and keep individuals on a path to retirement.”
Outliving retirement savings
Almost seven in 10 (68%) workers surveyed said they are at least somewhat confident that they will be able to meet their retirement savings goals, though just 34% are very confident. And retirement savings are up: 55% increased their retirement savings over the past year, while only 8% reduced their savings.
But this optimism doesn’t eliminate their concerns: 58% of working respondents believe they will outlive their retirement savings. This fear of outliving assets, often termed longevity risk, is a primary concern for many, highlighting a potential disconnect between current confidence and the long-term sustainability of retirement funds. Even with positive market conditions and increased account balances, the prospect of a shortfall remains a significant worry for a large segment of the working population.
Further, 49% find managing retirement savings stressful; only 11% find it without stress.
‘Save more’ not only answer
“New, more sophisticated solutions are coming to market, including alternative asset classes that may diversify risk and return drivers and potential guaranteed income strategies that add stability and predictability,” said Greg Calnon, Co-head of Public Investing at Goldman Sachs Asset Management. “Plan providers can help retirement savers responsibly integrate these solutions into a personalized retirement plan to improve outcomes. Personalized investing and advice will be essential to maximize the potential opportunity.”
As the challenges for retirement savers mount, it can be incredibly difficult to close a retirement savings gap with higher savings alone. The ray of hope provided by new and innovative options can boost overall retirement savings:
• Early Savings Accounts: $500 in annual savings from ages 1 to 20, to jump start one’s retirement savings, can boost final retirement savings by 14%.
• Access to Defined Contribution Plan: Savers with access to an employer-sponsored retirement plan have a 29% higher savings to income ratio than those without access to a plan.
• Allocation to private markets: A modest allocation to diversified private-market investments can add 0.50% of excess annual return over the course of a career, resulting in 14% higher retirement savings.**
• Investing with a Personalized Plan: Retired respondents who saved with a personalized plan for retirement had a 27% higher savings to income ratio than those who saved without a personalized plan.
• Guaranteed Income May Boost Retirement Income: A 30% allocation to guaranteed income (single premium income annuity at 7.1%) can boost retirement income by 23% relative to the 4% rule.
** Based on a modeled glidepath portfolio integrating private equity and private credit and evaluating the risk and return between the portfolio with and without private market investments. 14% represents the difference in retirement savings based on a 50bps higher return.
Goldman Sachs’ “New Economics of Retirement” report findings are from 5,102 individuals surveyed in July 2025 and provide insights from a diverse set of perspectives, including working individuals (3,588 across generations), and retired individuals (1,514 age 45–75).
Check out the full report here.
SEE ALSO:
• Goldman Sachs, T. Rowe Price Team Up to Sell Private-Market Products for Retirement and Wealth Investors
• Goldman Sachs Launching Private Credit CIT for 401(k) Market