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Americans Think They’ll Need $1.8 Million in Retirement
By Pete Grieve MONEY RESEARCH COLLECTIVE
It’s a sum that feels out of reach for many savers amid concerns about rising retirement expenses, according to a new study from Charles Schwab.
The golden years don’t come cheap: When you ask Americans how much money they think they’ll need in retirement, their average answer is a whopping $1.8 million. And while that’s unchanged from last year, it’s up from 2022, when the average prediction was $1.7 million.
It’s a sum that feels out of reach for many savers amid concerns about rising retirement expenses and increases in the general cost of living, according to a new study from Charles Schwab.
The brokerage firm found that people expect to retire at age 65 and have their retirement savings last for 23 years, based on a survey of adults using 401(k) plans to save.
Where are they planning to get that cash? Respondents expect most of their retirement savings, 43%, to come from their 401(k)s. That’s more than Social Security (which folks expect to make up 16% of their retirement income) and savings and investments (13%).
“Uncertainty about the future of Social Security means employers will play an increasingly important role in helping workers develop a retirement income stream not only through their 401(k), but also through other workplace financial benefits,” Marci Stewart, director of client experience at Schwab Workplace Financial Services, said in a Wednesday news release.
The good news: Workers are confident they’ll reach retirement goals
Despite the sizable sum they think they need to save, Americans are more optimistic about their financial path to retirement than last year. The share of workers who say they’re very likely to achieve retirement goals was 43% in this iteration of Schwab’s survey, up from 37% in 2023.
“Workers are feeling more confident about their ability to reach their financial goals for retirement as anxiety around inflation and market volatility has come down since last year,” the company wrote in the release.
However, 45% still say they’re just “somewhat likely” to reach their retirement savings goals. And another 12% admit making those retirement dreams a reality is “not likely.”
This, too, may be linked to the economic environment. In 2024, workers say inflation is the top obstacle to saving for a comfortable retirement. Challenges including stock market volatility and keeping up with monthly bills are also significant hurdles.
Other wealth management companies conduct similar polling on how much people think they’ll need in retirement. In April, Northwestern Mutual reported the figure at $1.46 million.
Unfortunately, the actual savings that most Americans have is far shy of the amounts they think they’ll need: Northwestern Mutual found the average savings balance among adults is just $88,400.
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Pete Grieve is a New York-based reporter who covers personal finance news. At Money, Pete covers trending stories that affect Americans’ wallets on topics including car buying, insurance, housing, credit cards, retirement and taxes. He studied political science and photography at the University of Chicago, where he was editor-in-chief of The Chicago Maroon. Pete began his career as a professional journalist in 2019. Prior to joining Money, he was a health reporter for Spectrum News in Ohio, where he wrote digital stories and appeared on TV to provide coverage to a statewide audience. He has also written for the San Francisco Chronicle, the Chicago Sun-Times and CNN Politics. Pete received extensive journalism training through Report for America, a nonprofit organization that places reporters in newsrooms to cover underreported issues and communities, and he attended the annual Investigative Reporters and Editors conference in 2021. Pete has discussed his reporting in interviews with outlets including the Columbia Journalism Review and WBEZ (Chicago's NPR station). He’s been a panelist at the Chicago Headline Club’s FOIA Fest and he received the Institute on Political Journalism’s $2,500 Award for Excellence in Collegiate Reporting in 2017. An essay he wrote for Grey City magazine was published in a 2020 book, Remembering J. Z. Smith: A Career and its Consequence.