Key Takeaways
- Adults in the U.S. believe they will need an average of $1.46 million to retire comfortably, a number trending considerably higher than the current inflation rate, according to findings from Northwestern Mutual’s 2024 Planning & Progress Study.
- With average retirement savings of $88,400, the gap between what people think they'll need for retirement and what they've saved is large.
- About 68% of private industry workers have access to 401(k) options, but only 51% take advantage of them, according to the U.S. Bureau of Labor Statistics.
Adults in the U.S. predict they'll need far more money to retire than they currently have, and their predictions are growing far faster than inflation.
Adults in the U.S. believe they will need an average of $1.46 million to retire comfortably, according to findings from Northwestern Mutual’s 2024 Planning & Progress Study. The amount of money people think they'll need is up 15% from last year, nearly five times the price increases over the same period.
Actual Retirement Savings Lag Behind
Unfortunately, Americans' actual retirement savings aren’t up to par. The average is $88,400, more than $10,000 off its five-year peak of $98,800 in 2021, according to the study. Across all segments, the gap between what people think they'll need for retirement and what they've saved is large.
"People's 'magic number' to retire comfortably has exploded to an all-time high, and the gap between their goals and progress has never been wider," said Aditi Javeri Gokhale, chief strategy officer, president of retail investments, and head of institutional investments at Northwestern Mutual. "Inflation is expanding our expectations for retirement savings, and putting the pressure on to plan and stay disciplined,"
Roadblocks to Adequate Savings
While inflation is making retirement look increasingly expensive, Americans are also missing out on traditional methods of creating a retirement nest egg.
Pension plans, a common benefit up until the 1980s, are nearly non-existent today. And while Social Security provides about 90% of the income for more than a quarter of older Americans, the trust fund is facing a 75-year deficit and is expected to be depleted by the mid-2030s.
While 68% of private industry workers have access to 401(k) options, only 51% take advantage of them, according to the U.S. Bureau of Labor Statistics. Of that number, many are cashing out to cover necessary living expenses. According to Fidelity, in the third quarter of 2023, 2.3% of workers took a hardship withdrawal from their 401(k) savings, up from 1.8% the same quarter the year prior.
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FAQs
According to the Federal Reserve's latest Survey of Consumer Finances, only about 10% of American retirees have managed to save $1 million or more.
Do Americans think they need 1.5 million to retire? ›
Americans think they need almost $1.5 million to retire. Experts say to focus on another number instead. Americans' “magic number” savings goal for retirement has increased by over 50% since 2020. But experts say the secret to building true wealth is having a high savings rate.
How much does the average person have in savings when they retire? ›
The average retirement savings for all families is $333,940, according to the 2022 Survey of Consumer Finances. The median retirement savings for all families is $87,000.
How much money Americans think they need to retire comfortably? ›
Americans believe they will need to save $1.46 million to retire comfortably, according to Northwestern Mutual's 2024 Planning & Progress Study. Here is how much they will need to save each month to get there by age 65.
How many retirees have no savings? ›
WASHINGTON—A new AARP survey finds that 20% of adults ages 50+ have no retirement savings, and more than half (61%) are worried they will not have enough money to support them in retirement.
How much does the average 70 year old have in savings? ›
The Federal Reserve also measures median and mean (average) savings across other types of financial assets. According to the data, the average 70-year-old has approximately: $60,000 in transaction accounts (including checking and savings) $127,000 in certificate of deposit (CD) accounts.
What is a good monthly retirement income? ›
More? Financial planners often recommend replacing about 80% of your pre-retirement income to sustain the same lifestyle after you retire. This means that, if you earn $100,000 per year, you'd aim for at least $80,000 of income (in today's dollars) in retirement.
What is the average Social Security check? ›
Social Security offers a monthly benefit check to many kinds of recipients. As of May 2024, the average check is $1,778.24, according to the Social Security Administration – but that amount can differ drastically depending on the type of recipient. In fact, retirees typically make more than the overall average.
How many people can't afford to retire? ›
About 1 in 4 have no retirement savings, according to research released Wednesday by the organization that shows how a graying America is worrying more and more about how to make ends meet even as economists and policymakers say the U.S. economy has all but achieved a soft landing after two years of record inflation.
What is the #1 concern in retirement? ›
1. Saving Enough Money: Perhaps the top retirement concern is the idea that without steady employment, it might be difficult to have enough resources to maintain your preferred lifestyle. The cost of living can be high, and Social Security benefits may not be enough to cover all your living expenses.
Average Retirement Spending
According to the Bureau of Labor Statistics (BLS), the average income of someone 65 and older in 2021 was $55,335, and the average expenses were $52,141, or $4,345 per month.
At what age should you have $1 million in retirement? ›
Based on this, if you retire at age 65 and live until you turn 84, $1 million will probably be enough retirement savings for you. However, it's important to remember there is no one-size-fits-all amount.
What is considered wealthy in retirement? ›
Super wealthy (99th percentile): $16.7 million. Wealthy (95th percentile): $3.2 million. Well off (90th percentile): $1.9 million. Middle class (50th percentile): $281,000.
How long does $1 million last after retirement? ›
Around the U.S., a $1 million nest egg can cover an average of 18.9 years worth of living expenses, GoBankingRates found. But where you retire can have a profound impact on how far your money goes, ranging from as a little as 10 years in Hawaii to more than than 20 years in more than a dozen states.
