How much money does it take to bankroll a comfortable retirement? If you ask Americans, the average answer is an astounding $1.46 million.
That’s per a recent Northwestern Mutual survey of 4,500 U.S. adults, which found retirement cost expectations have spiked since 2020. This year’s average estimate is 53% higher than it was four years ago, when people said they’d need $951,000 to retire.
When it comes to their actual savings, though, Americans are far from achieving their expected retirement needs: Survey respondents reported their average retirement savings is just $88,400 in 2024.
That’s a $10,000 decrease from the average retirement savings recorded by Northwestern Mutual in 2021, when the metric hit its five-year peak of $98,800.
“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,” Aditi Javeri Gokhale, Northwestern Mutual's chief strategy officer, president of retail investments and head of institutional investments, said in a news release.
It’s likely that people are giving more thought to how variables like inflation will affect their financial needs in retirement, given that prices on everything from food to housing have exploded over the last few years. And they’re probably wise to do so: Americans between 60 and 65 say they’re now spending an average of 53% of their income on everyday essentials, according to a December study from Nationwide Mutual’s retirement research division.
At the same time, the decline in workers’ retirement nest eggs shows how economic factors like inflation may be hurting their ability to save. Given how much the average savings reported in Northwestern Mutual’s survey has fallen in the last four years, it’s no wonder that more than half of U.S. adults say they won’t be able to achieve a secure retirement.
You can find out more about Northwestern Mutual’s findings by reading my story. If you have any burning questions or want to share your retirement experience, drop me a line at mcags@money.com.
— Mary Ellen Cagnassola, Money reporter
