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 a recent Northwestern Mutual study which surveyed about 4,500 adults, Americans believe they'll need $1.46 million to have a comfortable retirement, but the average amount they've saved is only $88,400.
Do you actually need $1.46 million to retire comfortably? ›
In the federal survey, the typical senior who reported a satisfactory retirement had $50,000 to $100,000 in savings. “It's impossible to find any evidence that seniors need even a fraction of $1.46 million in savings to be financially secure,” Biggs wrote.
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.
What percent of people retire with $1 million in savings? ›
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. This leaves a significant 90% who fall short of this milestone.
How much money does the average person have when they retire? ›
The answer depends almost entirely on you, your habits now and your plans for later,” the financial services firm noted on its website. Data from the Federal Reserve's most recent Survey of Consumer Finances (2022) indicates the median retirement savings account balance for all U.S. families stands at $87,000.
Can I retire at 70 with $3 million? ›
Summary. $3 million should be more than enough to fund your retirement, even if you choose to retire early. A number of factors are at play when determining how long $3 million will last, including your investment strategy and retirement lifestyle.
Can I retire at 55 with $1 million? ›
It's definitely possible, but there are several factors to consider—including cost of living, the taxes you'll owe on your withdrawals, and how you want to live in retirement—when thinking about how much money you'll need to retire in the future.
How many Americans retire with no money? ›
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 will Gen Z need for retirement? ›
By generation, both Gen Z and Millennials expect to need more than $1.6 million to retire comfortably. High-net-worth individuals – people with more than $1 million in investable assets – say they'll need nearly $4 million.
What a $1 million retirement really looks like? ›
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.
And this estimate is no different. Northwestern Mutual surveyed 4,588 adults and found: The new “magic” number for a comfortable retirement is $1.46 million. It's up 15% from last year's $1.27 million number and is also an eye-popping 53% higher than the 2020 estimate.
How much does the average 75 year old have in savings? ›
Savings by Age
| Age | Average Account Balance | Median Account Balance |
|---|
| 45 to 54 | $48,200 | $6,400 |
| 55 to 64 | $57,670 | $5,620 |
| 65 to 74 | $60,410 | $8,000 |
| 75 and older | $55,320 | $9,300 |
2 more rowsSep 19, 2023
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.
What is the average 401k balance at age 65? ›
Average and median 401(k) balances by age
| Age range | Average balance | Median balance |
|---|
| 35-44 | $76,354 | $28,318 |
| 45-54 | $142,069 | $48,301 |
| 55-64 | $207,874 | $71,168 |
| 65+ | $232,710 | $70,620 |
2 more rowsMar 13, 2024
Social Security benefits are much more modest than many people realize; the average Social Security retirement benefit in February 2024 was about $1,862 per month, or about $22,344 per year. (The average disabled worker and aged widow each received less.)
How many households have no savings? ›
As families continue working to make ends meet, a report from USA Facts reflects that almost half of American households have no retirement savings. According to the Survey of Consumer Finances, in 2022 almost half of American household retirement savings accounts were empty.
How much do you need to retire comfortably? ›
By age 40, you should have accumulated three times your current income for retirement. By retirement age, it should be 10 to 12 times your income at that time to be reasonably confident that you'll have enough funds. Seamless transition — roughly 80% of your pre-retirement income.
Is $4,000,000 enough to retire at 55? ›
Following this guidance, you could safely withdraw between $132,000 and $160,000 from your $4 million portfolio at age 55. That's more than three times the $42,842 that an average 55-year-old would need, suggesting your $4 million nest egg will be more than enough.
Can you retire comfortably with $5 million dollars? ›
A $5-million nest egg will fund a comfortable lifestyle by most standards. Using a 4% withdrawal rate, you could have $200,000 to spend annually and be reasonably sure that you would not run out of money during a 30-year retirement.
