by Charlotte Hazard
This is a stark difference from 2020 when American adults believed they needed $951K to retire.
The bills for groceries, rent and gasoline aren't the only things soaring in Joe Biden's America: the amount of money Americans feel like they need to squirrel away in order to retire has jumped by more than half since Donald Trump left office.
A study conducted by the Northwestern Mutual found U.S. adults believe that they will need to have $1.46 million saved in order to retire, up 15% from last year's $1.27 million estimate and 53% from the $951,000 figure they cited in 2020 before Biden took office.
"In 2023, the soaring cost of eggs in the grocery store symbolized inflation in America. In 2024, it's nest eggs," Northwestern Mutual Retail Investment President Aditi Javeri Gokhale said. "People's 'magic number' to retire comfortably has exploded to an all-time high, and the gap between their goals and progress has never been wider. Inflation is expanding our expectations for retirement savings, and putting the pressure on to plan and stay disciplined."
In February, the Federal Consumer Price Index reported that the inflation rate increased 3.2% as voters remain on edge about the economy ahead of the 2024 election.
Northwestern Mutual's study also raised alarm about a growing gap between what Americans think they need for retirement and what they have saved. The average amount of money that U.S. adults have saved for retirement has dropped from $89,300 in 2023 to $88,400 in 2024.
Even worse, the total is down $10,000 from its five-year peak of $98,800 reported in 2021.
Javeri Gokhale explained that another issue to consider is the taxing of money put into a 401(k) and the impact it could have on an individual's retirement.
"Most people don't realize that their retirement income may be taxed about 20% or 30% when they withdraw and spend it. When they recognize the impact, it's often too late for them to adjust," he warned.
The study found that the average age that Americans start saving for retirement is 31, but that Generation Z, America's youngest, is getting a head start. Gen Z workers on average have started saving at age 22 and hope to retire by 60.
In contrast, Baby Boomers started saving on average at age 37 and expect work until the age of 72 while Gen. X and millennials plan to finish work between the ages of 64 and 67.
"These numbers tell a fascinating story about the profound shift in financial planning that has taken shape in America," Javeri Gokhale said. "Young people today recognize the value of retirement planning and building wealth early on in life and are getting a significant head start over their parents and grandparents. At the same time, Gen Z is redefining retirement and signaling that they plan to have long and fulfilling post-career lives. The good news is that they are investing earlier so they can save the money they need to enjoy it."
The study polled 4,588 U.S. adults ages 18 and up and was conducted between Jan. 3-17.
Its findings are consistent with other surveys showing Americans are increasingly uneasy about retirement, A Gallup survey last May found workers’ expectations for a comfortable retirement are the most pessimistic they have been since 2012, falling 10 percentage points since 2021. In that poll, only 43% of non-retirees believe they will have enough money to live comfortably when they end work.
Charlotte Hazard
Source: https://justthenews.com/politics-policy/polling/tuesas-2024-prices-continue-skyrocket-americans-believe-theyll-need-146
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