Here’s how much money Americans think they need to retire comfortably

Retirement


A symptom of the big problem with America’s poor retirement system is the gap between how much people say they need to save for retirement and how much they actually save.

A new study from financial services firm Northwestern Mutual found that the average employee thinks they need $1.27 million to retire on good terms. But the survey found that the average retirement account balance is $89,300, far less than even Americans nearing or nearing retirement age. Most people in their 60s and 70s have only about $114,000 in retirement savings, the company’s study found.

“There’s a gap between retirement savings and what you think you’ll need in retirement,” Aditi Javeri-Gokale, chief strategy officer at Northwestern Mutual, told CBS Moneywatch.

Americans may be thinking these days that two years of high inflation mean they need to save more money for retirement, but last year inflation hit its highest level in 40 years. That’s still double the Federal Reserve’s annual target of 2%. But the so-called retirement gap hasn’t gone away, with people continuing to save far below what they’ll need for retirement.


401(k) Early Withdrawal and Impact on Savings

Americans are delaying their retirement age, with a poll of 2,740 adults predicting they will work until age 65 on average, up from 62.6 in 2021. A study by Northwestern Mutual found that the retirement age is 63, compared to 67 for those unable to save more money and focus on planning.

Jaberi Goukhale said the widespread shortage of retirement savings across the United States underscores the need to start saving early. “To make your retirement goals realistic, you need to start early, and if you start early, you need to have a comprehensive financial plan.”



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