Americans believe they need $1.46 million to retire comfortably, jumping 15 percent in just a year and more than 50 percent since 2020, according to newly published data.
According to Northwest Mutual’s 2024 Planning & Progress study, the new record-high “magic number” for retirement far outpaces the inflation rate, which currently hovers between two and three percent.
Back in 2020, Americans reported that their target retirement goal was $951,000.
The newly-published study is part of a series of research in which the company explores Americans’ attitudes, behaviors, and perspectives across a range of issues surrounding long-term financial security.
“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 and president of retail investments and head of institutional investments at Northwestern Mutual, in a statement.
“Inflation is expanding our expectations for retirement savings, and putting the pressure on to plan and stay disciplined,” Ms. Gokhale said.
Nonetheless, some Americans believe the magic number is simply out of reach.
“I think that’s crazy and unrealistic for average Americans,” Caryl Birke, 76, told NTD News.
“Social security and Medi-Cal are so important to retirees. It’s enough to live on, without any frills,” she added.
The study also looked at retirement targets by generation and pointed out that both Gen Z’ers and Millennials think they actually need more than $1.6 million to retire comfortably.
Some Americans, however, believe retirement goals vary among individuals, and the new magic number isn’t necessarily aligned with a person’s plans for their golden years.
“I don’t think that applies to all retirees because everyone retires differently like ones who still want to vacation and travel, while others who just want to retire and lay low with family,” Carol Ferguson, 80, told NTD News. Ms. Ferguson, a California resident, retired at 70 years of age.
“If I was still working I would be worried about retiring with the way things are going,” she notably added.
There are also major gaps between what Americans think they will need to retire versus what they actually have saved so far.
“Gen Z started saving at 22 and expects to retire at 60; Boomers started saving at 37 and expect to retire at 72,” according to the study.
The data also revealed that the average age most people expect to work is 65.
“As a teacher, my retirement seems more stable, or at least that’s what we’ve always been told. But there’s no way I can keep teaching past my 60s,” according to Katie Thompson, 43, who has been teaching for more than 20 years. As for the new magic number for retirement, “that seems like a lot of money,” she told NTD News.
The survey also showed that the United States is currently experiencing a so-called “silver tsunami.”
“In 2024, more than four million Americans will turn 65. That’s an average of 11,000 Americans per day, and it will continue through 2027. It’s the largest surge of Americans hitting the traditional retirement age in history,” the data states.
As for whether or not Americans are truly prepared, the survey notably revealed that only half of Boomers and Gen X believe they will be financially ready for retirement when the time comes.
