The golden years don’t come low cost: Once 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 is unchanged from last 12 months, it’s up from 2022, when the typical prediction was $1.7 million.
It’s a sum that feels out of reach for a lot of savers amid concerns about rising retirement expenses and increases in the overall cost of living, in response to a recent study from Charles Schwab.
The brokerage firm found that folks 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 lots of.
Where are they planning to get that money? Respondents expect most of their retirement savings, 43%, to return from their 401(k)s. That’s greater than Social Security (which folks expect to make up 16% of their retirement income) and savings and investments (13%).
“Uncertainty concerning the way forward for Social Security means employers will play an increasingly necessary role in helping staff develop a retirement income stream not only through their 401(k), but in addition through other workplace financial advantages,” Marci Stewart, director of client experience at Schwab Workplace Financial Services, said in a Wednesday news release.
The excellent news: Employees are confident they’ll reach retirement goals
Despite the sizable sum they think they need to save lots of, Americans are more optimistic about their financial path to retirement than last 12 months. The share of staff who say they’re very more likely to achieve retirement goals was 43% on this iteration of Schwab’s survey, up from 37% in 2023.
“Employees are feeling more confident about their ability to succeed in their financial goals for retirement as anxiety around inflation and market volatility has come down since last 12 months,” the corporate wrote in the discharge.
Nevertheless, 45% still say they’re just “somewhat likely” to succeed in their retirement savings goals. And one other 12% admit making those retirement dreams a reality is “unlikely.”
This, too, could also be linked to the economic environment. In 2024, staff say inflation is the highest obstacle to saving for a snug retirement. Challenges including stock market volatility and maintaining with monthly bills are also significant hurdles.
Other wealth management firms 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 almost all Americans have is much shy of the amounts they think they’ll need: Northwestern Mutual found the typical savings balance amongst adults is just $88,400.
More from Money:
Time Is Running out to Snag a CD With a 5% Yield
Why the Variety of Millionaires Is Exploding Worldwide
Social Security Advantages Have Lost 20% of Their Buying Power Since 2010: Report