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How much money does a US worker need to retire comfortably?

How much money does a US worker need to retire comfortably?

The ideal amount for a comfortable retirement in the United States is $1.46 million, according to a recent study. (Istock)

A recent study conducted by Northwestern Mutual And I posted it cbs news, It revealed that the average American now believes they need at least $1.46 million to retire comfortably. This amount represents a 53% increase compared to the target number managed in 2020. However, analysis of the data reveals that the majority of people are far from approaching this target, indicating that there is The average gap is $1.37 million Between current savings and desired retirement savings.

The magic number is at an all-time high“, he pointed out Aditi Jhaveri GokhaleStrategic Director of Northwestern Mutualin an interview with CBS MoneyWatch. This increase in retirement savings expectations is largely due to the impact of inflation and other financial pressures that have changed the perception and reality of the cost of living since the beginning of the pandemic.

Right now, average workers have just $88,400 in their retirement accounts.

An interesting trend emerging from the study is the relationship between longer life expectancy and Retirement savings needs. Generation ZFor example, people who are around 20 years old today aspire to retire at 60, and nearly one in three believe they will live to be 100.

Currently, the average American worker has $88,400 in savings for retirement. (Frebek).

This indicates Need to fund a retirement that can extend for 40 years. The increase in life expectancy and the duration of retirement undoubtedly contributes to the perception of the need for a larger “pool” of savings compared to previous years.

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Aside from economic pressures, there are Growing concern about the future of government support programsas Social Security in the United Statesfor whom Trust Fund Reserves It is expected to run out by 2033. This would result in reduced benefits if steps are not taken to strengthen the program before that year.

“We're seeing more stories about Social security“And you'll see more of that because it's an election year,” he commented. Gokhalewho also suggested this Potential decline in profits It has led many to consider the need to bear the brunt of their retirement personally.

The study revealed a disturbing fact about preparation for retirement among Americans, especially among Americans Many childrenMany of them have already begun their retirement. The survey, of 4,588 adults, highlights a major gap in financial planning: Nearly half of them admit they're unclear about how much money they really need for their retirement.

Half of adults surveyed don't have a clear idea of ​​how much they need for retirement. (stock struggle)

The study predicts that under the rule of thumb of withdrawing 4% of retirement savings annually, a “nest” of $1.46 million would allow for an annual income of about $58,400. This number, once added to the company's average earnings Social securitywhich comes out to about $23,000 a year, brings in a retirement income of about $81,000 a year, which exceeds the median household income of $74,580.

The report highlights that many Americans are far from achieving their goals $1.46 million mark In saving, what is most worrying is that there is a large number of citizens heading towards retirement without any savings of any kind.

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This realization comes from a combination of estimates and Recognizing the inadequacy of financial planning Or empty by many.

Additionally, it is important to realize that retirement needs vary greatly, depending on multiple factors such as a person's standard of living while working, local cost of living, taxes, and other financial details. This discrepancy reinforces the importance of careful and tailored planning to individual circumstances, beyond reliance on general perceptions or “feelings.”

The $1.46 million “nest” would provide a retirement income of about $81,000 per year. (stock struggle)

In the American retirement system The do-it-yourself mentality is prevalent It has become more important, especially with the shift from traditional retirement plans to… 401(k)As mentioned CBS News.

This change means that workers are now responsible for choosing their own investments and deciding how much of their income to save for retirement. Teresa Ghilarducciretirement expert and professor of economics at New School for Social Research in New YorkHe asserts that this system has left 90% of workers behind, given that only half of them have access to a retirement plan.

Although many Americans believe they do not have enough income to seek advice from a financial professional, from… Gokhalewhose company provides such a service, this may be an essential procedure.

However, study AARP Which was published earlier this year revealed this Nearly 6 in 10 people over the age of 50 have never spoken to a financial professionalmainly due to the perception that there are not enough savings to justify the said service and the high cost that this would entail.

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The situation becomes more complicated when you consider that self-management has become the norm for most Americans when planning for retirement. This do-it-yourself approach to retirement planning, according to Gokhalecan be “overwhelming and disheartening” if attempted without proper guidance.