Americans Think They'll Need $1.8 Million in Retirement

The golden years don't come cheap: When you ask Americans how much money they think they’ll need in retirement, their average answer is a whopping $1.8 million. And while that's unchanged from last year, it's up from 2022, when the average prediction was $1.7 million.

It’s a sum that feels out of reach for many savers amid concerns about rising retirement expenses and increases in the general cost of living, according to a new study from Charles Schwab.

The brokerage firm found that people expect to retire at age 65 and have their retirement savings last for 23 years, based on a survey of adults using 401(k) plans to save.

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Where are they planning to get that cash? Respondents expect most of their retirement savings, 43%, to come from their 401(k)s. That’s more than Social Security (which folks expect to make up 16% of their retirement income) and savings and investments (13%).

“Uncertainty about the future of Social Security means employers will play an increasingly important role in helping workers develop a retirement income stream not only through their 401(k), but also through other workplace financial benefits,” Marci Stewart, director of client experience at Schwab Workplace Financial Services, said in a Wednesday news release.

The good news: Workers are confident they'll reach retirement goals

Despite the sizable sum they think they need to save, Americans are more optimistic about their financial path to retirement than last year. The share of workers who say they’re very likely to achieve retirement goals was 43% in this iteration of Schwab’s survey, up from 37% in 2023.

“Workers are feeling more confident about their ability to reach their financial goals for retirement as anxiety around inflation and market volatility has come down since last year,” the company wrote in the release.

However, 45% still say they’re just “somewhat likely” to reach their retirement savings goals. And another 12% admit making those retirement dreams a reality is “not likely.”

This, too, may be linked to the economic environment. In 2024, workers say inflation is the top obstacle to saving for a comfortable retirement. Challenges including stock market volatility and keeping up with monthly bills are also significant hurdles.

Other wealth management companies conduct similar polling on how much people think they’ll need in retirement. In April, Northwestern Mutual reported the figure at $1.46 million.

Unfortunately, the actual savings that most Americans have is far shy of the amounts they think they’ll need: Northwestern Mutual found the average savings balance among adults is just $88,400.

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