Regardless of age, there is a wide gap between how much Americans say they need for retirement and how much they actually save.
A study conducted this week by Northwestern Mutual estimates that Americans need to save an average of $1.46 million to enjoy a comfortable retirement. This is a 15% increase compared to last year and a significant 53% increase compared to what Americans reported in 2020.
The problem is that the average amount American adults have saved for retirement is $88,400, down slightly from last year and more than $10,000 from 2021 onwards.
“Many Americans believe that the cost of a comfortable retirement will be higher than ever,” said John Rowland, a partner and private wealth advisor at Northwestern Mutual's Beyond Financial Advisors. he told Yahoo Finance. “Their 'magic number' for retirement savings is at an all-time high.”
Gen X anxiety
Only about 40% of Gen Xers feel they know how much money they need to retire comfortably. This is noteworthy because the oldest person in this group will turn 60 next year.
“As they see their retirement years approaching, the uncertainty about the future is causing a great deal of financial anxiety,” Rowland said.
On average, Gen Gen Z and Millennials are expected to need more than $1.6 million to retire comfortably, but they currently have $22,800 and $62,600, respectively.
According to a recent MetLife survey, more than one in three Gen Nearly 6 in 10 Gen
“The next generation of Gen “Lack of awareness and understanding can put this population at a disadvantage.”
read more: How much money should I save by the age of 50?
Longevity changes the calculation
One reason overall retirement savings projections have soared this year is because younger generations expect to live longer than older generations, both in general and in retirement, Roland said.
According to the report, three in 10 Millennials and Generation Z say they are likely or very likely to live to be 100 years old. Older crew members are less confident. He is one of only 2 in 10 Gen
The good news is that research shows each generation is starting to save for retirement earlier than before, Rowland said. “The average age for Americans to start saving for retirement is 31, but Gen Z has a significant head start.”
On average, Gen Zers start saving for retirement at age 22 and expect to retire at age 60, according to Northwestern Mutual. This was 15 years before baby boomers started saving at age 37 and planned to work until age 72.
“For example, Millennials and Gen Xers believe they will need $100,000 to $200,000 more than the average American to retire comfortably,” Roland said. “This is a big deal. As people live longer, it's important for people to consider the challenges that living longer can pose and factor those challenges into their financial planning.”
inertia rules
Northwestern Mutual data shows more than one-third across all generations have not taken steps to deal with the possibility of living beyond their savings, such as creating a financial plan or seeking advice from a financial advisor. .
read more: Planning for Retirement: A Step-by-Step Guide
For example, about half of Americans don't have a plan to deal with their retirement health care costs, which can easily exceed six figures.
And since it's tax season, only about 43 and older are fully aware of how taxes and a potential decline in the stock market could affect their retirement income. It is worth mentioning that only half.
Aditi Jhaveri Gokhale, chief strategy officer at Northwestern Mutual, said, “Most people are likely to be taxed about 20% or 30% when they withdraw and spend their retirement income. I didn't realize it was there,” he says. “By the time we recognize the impact, it is often too late to adapt.”
It's important to stay on top of generational trends.
“While it's interesting and informative to hear what other people need to retire comfortably, people know that their long-term goals and aspirations, as well as their personal financial situations, can be very different from others. We have to remember that there is a gender,” Rowland said. His main advice is to focus on what is important to you, set your own goals and take action.
Kelly Hannon is a senior columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 of her books, including “The World's Best.''Taking Control Even Over 50: How to Succeed in the New World of Work.” and “You’re never too old to get rich.” Follow her on X @Kellyhannon.
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