New research has found a new “magic” retirement savings number. I say “magic” because if you put 10 people in a room, you’ll get 10 different opinions about how much you should save for retirement… and this estimate is no different.
Northwestern Mutual surveyed 4,588 adults and found that the new “magic” number for a comfortable retirement is $1.46 million. That’s up 15% from last year’s $1.27 million, and is 53% higher than the 2020 estimate.
Broken down by generation, the numbers get even bigger.
Gen Z and Millennials expect to need around $1.6 million to comfortably retire, and people with over $1 million saved believe they’ll need nearly $4 million to be comfortable.
But, does the average American actually need $1.46 million to retire comfortably? Probably not.
Another “magic” number from Fidelity suggests Americans should have 10x their income saved by age 67.
If we 10x the median household income of $74,580, we get $745,800. That’s about half of the first “magic” number.
For some Americans, $750k will be enough to retire on. For others, it won’t be nearly enough to support the lifestyle they want.
Planning For Retirement Isn’t About “Magic” Numbers
When we consider that the average retirement savings hovers around $88,000, the gap between desire and reality has never been greater.
Most people don’t really know how much money they will need in retirement, and can wildly overestimate it.
As much as humans like to look for simple answers and rules to follow, turning a portfolio into retirement income is complex.
I wish I could give each person in that survey an advisor to help them calculate their own retirement target instead of guessing.
How Our Future Weighs On Inflation
Inflation has been very high for the last few years, and (in my opinion) the survey reflects the worry many feel about how much prices are rising. And how long high inflation will linger.
The latest March report shows that prices rose 3.5% over the last 12 months. That’s stronger than analysts had expected, and increases concerns that inflation isn’t actually tamed yet.
This negative surprise is likely to push back a Fed interest rate cut and stroke market volatility.
We’re keeping an eye on the situation and will be in touch with updates as needed.
Bautis Financial LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
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