A recent study by Northwestern Mutual has revealed that the average American believes they need about $1.46 million saved for retirement, despite the fact that most Americans only have less than $89,000 saved for retirement. This disparity is due to inflation affecting retirement savings and expanding expectations for how much money is needed to retire comfortably. The gap between Americans’ retirement goals and their actual savings has never been wider, putting pressure on their ability to plan and save for retirement.
The study also found that older Americans, particularly those aged 40-59, feel they need even more money saved for retirement than the average American. For example, those aged 50-59 believe they need around $1.74 million saved, but only have around $115.7k saved up. Similarly, those aged 40-49 believe they need around $1.3 million saved, but actually only have $91.5k saved. This shows that as Americans get closer to retirement age, they are becoming increasingly aware of the gap between their savings and their retirement goals.
Interestingly, a survey conducted by Bankrate found that only 40% of Generation X workers know exactly how much they will need to retire. This lack of financial planning and uncertainty about retirement savings could lead to financial insecurity in retirement. Additionally, the average retirement age for women was found to be 63 and for men was 65 in a 2016 survey conducted by the US Census Bureau. This suggests that despite the awareness of the importance of retirement savings, many Americans may still not be adequately prepared for retirement.
New York and New Jersey were recently ranked amongst the worst states to retire in, with high costs of living, rent, and healthcare cited as major factors. New York was ranked as the seventh worst state to retire in, with living costs 27% higher than the national average, and housing costs 80% higher than the national average. Similarly, New Jersey was ranked as the second worst state to retire in, with high healthcare costs and overall affordability issues. These rankings highlight the challenges that Americans face when planning for retirement, especially in states with high costs of living and limited affordability.
Retirement planning and savings are crucial for Americans of all ages, as the cost of living and inflation continue to rise, making it even more challenging to reach retirement goals. The gap between retirement savings and retirement goals is widening, especially for older Americans who may feel they need even more money saved for retirement than the average American. With uncertainty about how much money is needed for retirement, it is important for individuals to start planning and saving early to ensure financial security in retirement. States with high costs of living, like New York and New Jersey, present additional challenges for retirees, emphasizing the importance of financial planning and savings.
