- Americans now believe they need $1.46 million to retire comfortably
- The average amount savers currently have set aside is $88,400
- Gen Z is starting to save for retirement earlier than previous generations
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(NewsNation) — Inflation has more people worried about their retirement savings, and according to a new survey, the gap between expectations and reality has never been wider.
A typical person now thinks they will need $1.46 million to retire comfortably, according to a Northwestern Mutual survey of 4,588 adults. That savings target has surged more than 50% since 2020, the financial services company said.
But actual retirement savings haven’t kept up with Americans’ lofty goals. Savers have set aside $88,400 on average, the survey found — $1.37 million less than what they believe they’ll need. Four years ago, the goal versus the current savings gap was $864,000.
“Inflation is expanding our expectations for retirement savings and putting the pressure on to plan and stay disciplined,” Aditi Javeri Gokhale, chief strategy officer at Northwestern Mutual, said in a release.
By generation, both Gen Z and Millennials think they’ll need even more than others ($1.6 million)to retire comfortably, in part because they expect to live longer. With that in mind, younger generations are starting to save earlier.
The typical American began saving for retirement at 31, but among Gen Z, the starting age is 22, Northwestern Mutual found. Millennials started saving at 27.
The generation closest to retirement, the baby boomers, have the smallest gap between their goal ($990k) and their current savings ($120,300) but still face a daunting $870k obstacle.
This year’s magic number for retirement marks a 15% increase from last year’s $1.27 million target, far outpacing inflation over the past year.
As far as what’s actually needed to retire, Fidelity recommends having 10 times your salary saved by age 67. That assumption is based on a person who saves 15% of their income each year beginning at age 25 and invests more than 50% on average of their savings in stocks over their lifetime.
Recent gains in the stock market have provided a welcome boost to workers’ 401(k) accounts, but the broader rise in prices has left many feeling anxious about the future. Last year, more Americans had to crack their nest eggs to make ends meet.
More than 40% of people in a recent Allianz Life survey said they have dipped into their retirement savings because of inflation. Over half of respondents said they’ve taken on more debt due to rising prices.
