When it comes to retirement, Americans simultaneously determine that they need to hoard more for a comfortable retirement and fall short of their savings goals. That’s according to two new surveys highlighting the challenges the nation’s retirement savers face.
According to a survey by Northwestern Mutual, savers say they need a larger nest egg to enjoy a comfortable retirement. The results show that Americans say they need $1.25 million to retire comfortably, up 20% from 2021.
According to Christian Mitchell, director of clients at Northwestern Mutual, high inflation and volatile markets are responsible for the increase. “We have also seen an increase in annual spending not only due to inflation but also because people have regained a sense of normalcy in their lives after the early days of the pandemic,” he said in a statement. . “These factors are causing many people to reframe their thinking about how much they will need to retire and how long it will take to get there.”
The Northwestern Mutual survey – polling 2,381 American adults aged 18 and over – found that average American retirement savings fell to $86,869 from $98,800 a year last year, down 11%. A quarter of Americans say they are increasing their savings in retirement, and many more expect to work longer than originally planned. According to the survey, the expected retirement age has increased to 64 from 62.5.
At the same time, 55% of Americans say their retirement savings aren’t where they need to be, up three percentage points from a year ago, according to a survey by personal finance website Bankrate. Just over a third of Americans say they are “significantly behind” their retirement savings goals. And it’s a more serious problem among older Americans, with 71% of baby boomers reporting they’re slow to save, according to Bankrate, a poll of 2,312 adults.
It can be difficult for investors to meet their savings goals. They are facing waves, with the market slumping this year and inflation soaring to record highs. However, hiring has also slowed unemployment rate remained low at 3.5%.
“People who already feel left behind are twice as likely to contribute less this year than workers who feel they are on the right track or ahead of where they should be,” said Greg McBride, Bankrate’s chief financial analyst, said in a statement.
Retirees received some relief this year in the form of higher Social Security benefits. 8.7% recently announced Cost of living is the highest since the 1980s.
And the IRS promoted 401(k) and IRA contribution limit inflation calculation; people 50 and older can put an extra $3,000 into their 2023 workplace plan this year. Of course, the recovery in the market will also lift the retirement assets of investors.
However, Americans have long struggled with saving enough for retirement. And many investors today are pessimistic about their retirement prospects, according to a survey by Northwestern Mutual. Forty-three percent of respondents said that they do not expect to be financially ready for retirement.
Write to Andrew Welsch at [email protected]