FOX Business' Ashley Webster talks to diners in The Villages, Florida, about retirement as a Northwestern Mutual survey claims it will take $1.46M to retire comfortably.
Inflation has made the cost of just about everything in the U.S. more expensive — including retirement.
A new study published by Northwestern Mutual found the "magic number" that Americans believe they need in order to retire comfortably hit $1.46 million this year, the highest level on record.
The figure represents a nearly 15% jump from the $1.27 million that Americans said they needed in 2023, easily outstripping the current 3% inflation rate in the country.
Over the past five years, Americans' "magic number" has surged 53% from the $951,000 reported in 2020, according to the financial services firm.
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The figure represents a nearly 15% jump from the $1.27 million that Americans said they needed in 2023, easily outstripping the current 3% inflation rate in the country. (iStock / iStock)
By generation, both Gen Z and millennials anticipate they will need more than $1.6 million to retire comfortably. Among high net-worth individuals — or those with more than $1 million in investable assets — the figure catapults to about $4 million.
Even though they expect to need more money in retirement, Americans are not actually saving more.
The average amount that U.S. adults have tucked away for retirement fell to $88,400 from $89,300 in 2023. However, that is down more than $10,000 from the five-year peak of $98,800 in 2021, the study said. In total, the gap between what people think they need for retirement and what they have actually saved is $1.37 million. By comparison, just five years ago, that was about $874,000.
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"Across all segments, there are large gaps between what people think they’ll need to retire and what they’ve saved to date," the study said.
The study comes as Americans continue to confront stubbornly high inflation that has rapidly eroded their purchasing power and, in some cases, forced them to use their retirement savings as a financial lifeline.
Shoppers are seen in a Kroger supermarket in Atlanta on Oct. 14, 2022. (Elijah Nouvelage / AFP / Getty Images)
A separate study by the Alliance Life Insurance Company of North America shows that nearly 7 in 10 respondents said they have not contributed as much to their savings due to higher prices for everyday goods, while 42% of households reported dipping into their retirement savings.
"The rising cost of living is stretching American budgets," said Kelly LaVigne, vice president of consumer insights at Allianz Life. "Just because inflation has slowed doesn’t mean prices have gone down. In the short term, it may be wise to delay any major purchases to keep saving toward your future and avoid taking on new debt."
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Inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent. The burden is disproportionately borne by low-income Americans, whose already-stretched paychecks are heavily impacted by price fluctuations.
While inflation has fallen considerably from a peak of 9.1% notched during June 2022, it remains above the Federal Reserve's 2% goal. And when compared with January 2021, shortly before the inflation crisis began, prices are up a stunning 18.49%.
FAQs
A new study published by Northwestern Mutual found the "magic number" that Americans believe they need in order to retire comfortably hit $1.46 million this year, the highest level on record.
What is the new magic number to retire comfortably? ›
The majority of retirees surveyed believe that they will need $1.46 million in the bank to retire comfortably, according to Northwestern Mutual's 2024 Planning & Progress Study. That's a 15% increase — which far outpaces the 3% to 5% inflation rate — over last year and is up 53% from 2020.
How much money do you need to retire with $150000 a year income? ›
The Final Multiple: 10-12 times your annual income at retirement age. If you plan to retire at 67, for instance, and your income is $150,000 per year, then you should have between $1.5 and $1.8 million set aside for retirement.
What is a good monthly retirement income? ›
Average Monthly Retirement Income
According to data from the BLS, average 2022 incomes after taxes were as follows for older households: 65-74 years: $63,187 per year or $5,266 per month. 75 and older: $47,928 per year or $3,994 per month.
How much does a married couple need to retire at 65? ›
It's recommended that most couples save at least seven to eight times their combined annual income to retire comfortably.
What is the magic number formula? ›
How To Calculate Your SaaS Magic Number. To determine your SaaS Magic Number, take the current quarter's recurring revenue and subtract the previous quarter's recurring revenue, then multiply the result by four (to annualize it) then divide it by your sales and marketing costs in the previous quarter.
What is the magic number rule? ›
'Magic numbers' are numbers that occur multiple times in code without an explicit meaning. They should preferably be replaced by named constants.
How many people have $3,000,000 in savings in usa? ›
1,821,745 Households in the United States Have Investment Portfolios Worth $3,000,000 or More.
What percentage of retirees have $1 million dollars? ›
In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved.
What percentage of retirees have $2 million dollars? ›
According to EBRI estimates based on the latest Federal Reserve Survey of Consumer Finances, 3.2% of retirees have over $1 million in their retirement accounts, while just 0.1% have $5 million or more.
Social Security offers a monthly benefit check to many kinds of recipients. As of December 2023, the average check is $1,767.03, according to the Social Security Administration – but that amount can differ drastically depending on the type of recipient. In fact, retirees typically make more than the overall average.
What is the average Social Security check at 62? ›
According to recently released data from the SSA's Office of the Actuary, just over 590,000 retired-worker beneficiaries were receiving $1,298.26 per month at age 62, as of December 2023. That compares to about 2.11 million aged 66 retired-worker beneficiaries who were taking home $1,739.92 per month.
What is the average 401k balance at age 65? ›
Average and median 401(k) balances by age
| Age range | Average balance | Median balance |
|---|
| 35-44 | $76,354 | $28,318 |
| 45-54 | $142,069 | $48,301 |
| 55-64 | $207,874 | $71,168 |
| 65+ | $232,710 | $70,620 |
2 more rowsMar 13, 2024
Yes, it is possible to retire comfortably on $500k. This amount allows for an annual withdrawal of $20,000 from the age of 60 to 85, covering 25 years. If $20,000 a year, or $1,667 a month, meets your lifestyle needs, then $500k is enough for your retirement.
How long will $400,000 last in retirement? ›
Safe Withdrawal Rate
Using our portfolio of $400,000 and the 4% withdrawal rate, you could withdraw $16,000 annually from your retirement accounts and expect your money to last for at least 30 years. If, say, your Social Security checks are $2,000 monthly, you'd have a combined annual income in retirement of $40,000.
What is a safe number to retire with? ›
Financial planners often recommend replacing about 80% of your pre-retirement income to sustain the same lifestyle after you retire. This means that, if you earn $100,000 per year, you'd aim for at least $80,000 of income (in today's dollars) in retirement.
What is a good number to retire on? ›
10x your annual salary by 67
To fund an “above average” retirement lifestyle—where you spend 55% of your preretirement income—Fidelity recommends having 12 times your income saved at age 67, which is the normal Social Security retirement age.
What is a good number to save for retirement? ›
We found that 15% of income per year (including any employer contributions) is an appropriate savings level for many people, but we recommend that higher earners aim beyond 15%. So to answer the question, we believe having one to one-and-a-half times your income saved for retirement by age 35 is a reasonable target.
What is the 33x rule for retirement? ›
For example, if you plan on 3% SWR, your nest egg will need to be 33x your annual expenses to retire. But you're much less likely to deplete your portfolio than 4%. Your time to retirement, then, is how long it will take for you to build your nest egg to sufficient size.
