The average retirement savings in the U.S. has increased by 3% to $89,300 for 2023, up from $86,869 in 2022, according to the 2023 Planning and Progress study conducted by Northwestern Mutual. However, the expected retirement age has also risen sharply year over year, climbing from 62.6 in 2022 to 65 years in 2023.
“Americans’ magic number for retirement readiness continues to rise,” said Aditi Javeri Gokhale, chief strategy officer, president of retail investments and head of institutional investments at Northwestern Mutual. “The good news is that they are saving and investing more for tomorrow, even in this time of high inflation and market volatility. That is a step in the right direction and a reverse of what we saw last year when the gap widened rather than narrowed.”
Some interesting trends have emerged from the data, Gokhale said, including “a big disparity between what they think they’ll need to retire and what they’ve saved to date.”
When looking at the age groups specifically, the study shows that the average person in their 50s expects to need $1.56 million saved for a comfortable retirement, the highest figure cited by participants. Those in their 60s say they need $968,000 to retire comfortably, and respondents in their 70s expect to need $936,000, according to the data.
That figure increases substantially for those with higher net worths, who expect to need as much as $3 million to retire comfortably.
In terms of confidence in retirement preparedness, Gen Z is the most confident generation, with 65% saying they expect to be financially prepared for retirement. Millennials are next at 54%, followed by baby boomers who are not yet retired at 52%.
Generation X is the least confident, with only 45% expecting to be ready for retirement when the time comes.
“These retirement readiness feelings impact how long people expect to work,” the survey results say. “Boomers plan to work the longest (71) while Gen Z expects to retire more than a decade earlier (60). Millennials and Gen Xers plan to work to age 63 and 65, respectively. Overall, Americans on average plan to work until the age of 65, up from 64 last year and 62.6 in 2021.”
The study also found that people who “identify as disciplined financial planners knock two years off their retirement age,” believing it will be 63. Informal or non-planners, meanwhile, believe their retirement age will be 67, an addition of two years.
“One of the greatest gifts that financial planning provides is time,” said Gokhale. “Planning and discipline can unlock four years of life in retirement, and professional help is there for everyone regardless of where they are on their financial journey.”