Americans believe they will need around $1.25 million in the bank in order to live a comfortable retirement, though most retirement accounts have an average amount of around $87,000 by the time retirement comes. This is according to Northwestern Mutual’s 2022 Planning & Progress Study released this week.
The $1.25 million figure marks a 20% rise in the anticipated amount required to retire when compared to the results of the 2021 survey, though Americans’ average retirement savings has dropped 11% – from $98,800 last year to $86,869 in 2022 according to the results. The perceived expected retirement age has also risen from 62.6 last year to 64 this year.
“It’s a period of uncertainty for many people, driven largely by rising inflation and volatility in the markets,” said Christian Mitchell, EVP and chief customer officer at Northwestern Mutual. “We’ve also seen upticks in spending year-over-year not only as a result of inflation, but also as people have resumed a sense of normalcy in their lives following the earlier days of the pandemic. These factors are leading many people to recalibrate their thinking about how much they’ll need to retire and how long it will take them to get there.”
As many as 43% of all respondents also do not believe that they will be ready to retire on time, and low levels of confidence in general retirement preparedness exist according to the results. Just under half of all respondents — 45% — say they can imagine a period in which they reach retirement age, but Social Security no longer exists due to the general insolvency of the program that has not been effectively addressed by lawmakers.
This is also compounded by the fact that 36% of respondents report that they have not taken any action on their retirement planning. 33% of people believe that they will live to the age of 100, while the same figure also reports a belief that there is better than a 50% chance they will likely outlive their savings.
The pandemic also continues to influence peoples’ retirement perceptions. 25% of respondents believe the wide-ranging economic impacts of COVID-19 will push them to retire later, while 15% actually think they may retire earlier due to the pandemic.
The study, conducted by the Harris Poll, included 2,381 American adults aged 18 or older who participated in an online survey in February 2022. Results were weighted based on census data for education, age, gender, race/ethnicity, geographic region and household income.
Read the results of the study.