Americans’ retirement savings beliefs and their actual savings are not aligning, according to a recent study by Northwestern Mutual. While many Americans believe they need to have around $1.46 million saved for a comfortable retirement, the reality is that most Americans have less than $89,000 saved. This significant disparity between beliefs and savings highlights the challenges Americans face when it comes to planning for retirement.
The study reveals that inflation has had a detrimental impact on Americans’ retirement savings. As inflation rates rise, the expectations for retirement savings also increase, putting pressure on individuals to plan and stay disciplined. Northwestern Mutual reported that the perceived “magic number” for retirement savings has reached an all-time high of $1.46 million, a 15% increase from the previous year and a staggering 53% increase since 2020.
The study also provides insight into the retirement savings of different age groups. Those aged 50-59 believe they need around $1.74 million saved, but they only have an average of $115.7k saved up. Similarly, those aged 40-49 believe they need around $1.3 million saved, but they only have an average of $91.5k stashed away. These numbers highlight the gap between Americans’ retirement savings goals and their actual progress.
However, it is not just the lack of savings that is concerning. A survey conducted by Bankrate found that only 40% of “Gen X” workers know exactly how much they will need to retire. This lack of knowledge and understanding about retirement planning further complicates the situation.
In addition to these challenges, the study highlights the impact of location on retirement prospects. New York and New Jersey were ranked among the worst states to retire in, with New York listed at No. 7 and New Jersey at No. 2. The high cost of living, particularly in terms of housing and healthcare, contributes to the overall unaffordability of these states for retirees.
Overall, the study reveals a significant disparity between Americans’ retirement savings beliefs and their actual savings. With rising inflation and a lack of knowledge about retirement planning, Americans are facing challenges when it comes to securing a comfortable retirement. As the gap between retirement savings goals and actual progress widens, it becomes increasingly important for individuals to prioritize financial planning and seek guidance to ensure a secure future.
