Amid economic uncertainty and frequent market swings, many Americans are understandably anxious about their retirement savings. Some may be wondering: Is my 401(k) or IRA still on track? Will Social Security be there when I’m ready to retire?
These questions can weigh heavily on seniors and people nearing retirement, particularly those from communities of color (PDF), who often face greater financial insecurity because of occupational crowding in jobs that don’t offer retirement benefits, leading to lower retirement savings over time. Both individual strategies and broader policy reforms can grow and protect people’s retirement savings from market volatility and build their long-term financial resilience.
Workers nearing retirement today are more vulnerable to market volatility
According to the Investment Company Institute, US retirement savings totaled approximately $44 trillion as of 2025, making them the second-largest contributor to household wealth after home equity ($48 trillion) (PDF). Yet this figure masks deep disparities in access, allocation, and risk exposure.
For instance, many older workers—especially those nearing retirement—don’t benefit from automatic investment strategies like target date funds.
Source: Sarah Holden, Steven Bass, and Craig Copeland, “401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2022” (Washington, DC: Employee Benefit Research Institute, 2024), fig. 6, https://www.ebri.org/docs/default-source/pbriefs/ebri_ib_606_k-xsec-30apr24.pdf?sfvrsn=1f43072f_1
Note: Percentages are dollar-weighted averages.
A target date fund is a type of retirement investment that automatically adjusts its mix of stocks, bonds, and other assets over time, reducing exposure to volatile markets by shifting investments toward bonds as retirement approaches. Target date funds have become more common since the mid-2000s, but many of today’s older workers didn’t have access to them early in their careers when they set their allocations.
Market volatility has a disproportionate effect on communities of color
Though falling stock prices make headlines, it’s not just the decline but also the volatility itself that poses a significant threat to retirees. A sudden drop followed by a rebound can cause lasting damage if retirees are forced to sell at a loss to cover living expenses.
This is particularly concerning for people of color, who are more likely to experience job loss during downturns, have less liquid savings, and hold smaller retirement accounts overall.
Black and Hispanic households are significantly underrepresented in retirement account ownership. Although their balances tend to be lower, retirement assets make up a larger share of financial assets for Black and Hispanic people, making these assets more significant to their overall financial security. As a result, Black and Hispanic households’ financial retirement preparedness is more vulnerable to market volatility.
Source: 2022 Survey of Consumer Finances (SCF), https://www.federalreserve.gov/econres/scfindex.htm
Notes: We calculate positive retirement account balance as a share of positive financial assets. We use the SCF’s definitions. Retirement account includes IRAs, Keoghs, thrift-type accounts, and future and current account-type pensions. Financial assets include liquid assets, certificates of deposit, directly held pooled investment funds, stocks, bonds, quasiliquid assets, savings bonds, whole life insurance, other managed assets, and other financial assets. See the flowchart for detailed definitions: https://www.federalreserve.gov/econres/files/Networth%20Flowchart.pdf
A combination of individual strategies and policy reforms could help more people achieve retirement security
Addressing these disparities will likely require both individual strategies and broader policy reforms that expand access:
Buying annuities for lifetime income.
Annuities act as financial insurance, offering a guaranteed stream of income for life. Annuities may not be a perfect fit for everyone, given factors like liquidity needs, fees, higher inflation, and personal risk tolerance. But even converting a small portion of retirement savings—known as partial annuitization—can provide greater stability.
According to the Employee Benefit Research Institute’s 2025 Retirement Confidence Survey, nearly 70 percent of adults say having default investments in their retirement accounts that include annuities or other lifetime income products in a retirement plan is appealing.
Still, annuity adoption remains low across all racial and ethnic groups, especially among Black and Hispanic people, with fewer than 1 percent holding annuities (compared with 5 percent of White, non-Hispanic people).
Source: 2022 Survey of Consumer Finances, https://www.federalreserve.gov/econres/scfindex.htm
These gaps reflect broader challenges, such as limited opportunities to develop financial literacy, historical inequities in wealth, and minimum investment requirements for purchasing annuities. Increasing awareness, improving access through employer plans, and offering annuities as default options could help close these gaps over time.
For some retired people, converting part of their retirement savings into immediate annuities could be suitable. It’s important to consider personal financial goals, liquidity needs, and risk tolerance when evaluating this approach.
- Leveraging target date funds strategically.
Many older workers did not have access to target date funds early in their careers, leaving them exposed to unnecessary market risk. Expanding access to these funds could help bridge this gap.
This would require action from both policymakers and employers—such as encouraging or mandating the inclusion of target date funds in retirement plans (especially in workplace savings programs) and making them a default option. Portable solutions that follow workers from job to job can also help ensure long-term stability, particularly for those who change employers frequently.
- Building emergency savings into retirement plans.
Building resilience to market volatility should be part of a broader strategy to strengthen retirement security. One of the biggest threats to retirement security is early leakage, or taking loans or hardship withdrawals from retirement accounts. Allowing for emergency savings buffers within retirement plans can help prevent early leakage and provide cash during periods of economic uncertainty.
Recent evidence shows that emergency savings could reduce the share of people who take loans from their retirement accounts.
On a 2025 Employee Benefit Research Institute survey, 71 percent of respondents (PDF) said they were interested in an emergency savings account linked to their workplace retirement savings plan.
The SECURE 2.0 Act of 2022 (PDF) encouraged this option, which is now available through the private sector. By reducing the need to tap into retirement savings during emergencies, this approach can help protect long-term wealth accumulation, particularly among vulnerable populations.
- Expanding the earned income tax credit (EITC) to workers ages 65 and older.
Financial inclusion remains a critical priority during older adulthood. Expanding the EITC—a highly effective antipoverty program—to workers ages 65 and older could help older adults maintain economic stability and lower dependence on social safety net programs. This could support long-term financial resilience for individuals and promote fiscal responsibility on a societal level.
Combined with individual solutions, public policy reforms can help create a retirement system that offers greater security and dignity for all Americans, no matter their background or stage in life.
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