Here’s how much an American needs to retire comfortably

Retirement


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The expected price of a comfortable retirement continues to rise as Americans expect to live longer.

On average, Americans say they need at least $1.27 million for a comfortable retirement where they can relax, spend time with their family, and travel. But according to new research from financial firm Northwestern Mutual, their savings fall far short of expectations.

This chasm is known as the retirement gap, and another study by Pew suggests that cash shortages could cost taxpayers more than $1.3 trillion over the long term. It is

“The good news is that even in this time of high inflation and market volatility, they are increasing their savings and investments for tomorrow,” Aditi Javeri Gokhale, chief strategy officer at Northwestern, said in a news release on Thursday. It’s about being there,” he said.

Despite this, “there’s still a big gap between how much you think you’ll need for retirement and how much you’ve saved so far,” he added.

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According to research

In Northwestern’s latest Planning & Progress survey, the company sheds new light not only on the retirement gap, but also on the hopes, dreams and fears of Americans’ golden age.

  • The average amount adults are saving for retirement has increased 3% to $89,300 this year, up from $86,869 last year.
  • At the same time, the price expected for comfortable retirement is also rising. In 2023, Americans say they will need $1.27 million to retire comfortably. Last year it was $1.25 million.

Depending on the age group of the respondents, these figures vary greatly.

  • People in their 20s say they need $1.2 million. For those in their 30s, that’s $1.44 million. People in their 50s said $1.56 million, the highest reported on average.
  • Similarly, the amount of money these age groups have already saved varies considerably. Not surprisingly, the youngest respondents to this survey are the least anxious about their retirement.

Here’s how much each age group is saving for retirement and how much they think they’ll need on average:

  • 20’s: They believe they need $1.2 million to retire comfortably. The actual savings for him is $35,800.
  • 30s: He says he needs $1.44 million to retire comfortably. They have $67,400 in savings.
  • Forties: A comfortable retirement is said to cost $1.28 million. Their average retirement savings is $77,400.
  • 50s: They said they needed $1.56 million to retire comfortably, the highest of any age group. They average him ripping off $110,900.
  • Sixties: I believe $968,000 will give them a comfortable retirement. Their savings he is $112,500.
  • 70’s: report They need $936,000 to live comfortably in retirement. They have him max savings of $113,900.

A survey by Northwestern Mutual found that Americans, on average, have a 45% chance of running out of savings, but one-third of them said they didn’t take steps to avoid that possibility. .

The survey is based on responses from more than 2,700 US adults in February and March.

Conclusion

The so-called retirement gap is still sizable, but the average American’s retirement savings are finally picking up.

A recent report from investment firms Fidelity and Vanguard found that average 401(k) balances plunged more than 20% in 2022 amid the worst performance of the stock market. And last year’s Planning & Progress survey from Northwestern University found that average retirement savings fell from $98,800 in 2021 to $86,869 in 2022. 11% drop.

However, the market has performed impressively in the first half of the year and may continue to rise through the rest of 2023.

A new Northwestern report suggests that as the stock market recovers from last year’s slump, so are people’s retirement savings.

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