Americans need way more for retirement than they have saved

Big increases in the cost of living in the years since the global pandemic rocked the world have changed what Americans think they need to retire. Just being a millionaire is no longer enough according to data from Northwestern Mutual.

The average person now believes they will need at least $1.46 million if they want a comfortable retirement, a number which is up at roughly 16% from 2023, and a lot more than the average American has saved.

Northwestern Mutual's 2024 Planning and Progress Study discovered that what is now thought to be needed for retirement in the United States is roughly 17 times higher than the average $88,400 most have set aside for retirement.

Photo by Towfiqu barbhuiya on Unsplash

“People’s ‘magic number’ is now 50% higher than it was during the pandemic,” explained Aditi Javeri Gokhale, chief strategy officer at Northwestern Mutual according to a Bloomberg News report on the new retirement figures.

“Soaring costs are putting more pressure on consumers to plan and be disciplined savers, and everyone knows they will need more money as they live longer," added Gokhale. But what was the amount people thought they needed to retire in 2023?

Americans thought they would need roughly $1.27 million in order to retire comfortably according to Northwestern Mutual's 2023 study. That amount was also up from previous survey data by the financial services firm that suggested most people believed they needed at least $1.25 million to retire back in 2022. 

Interestingly, this number fluctuated in both 2023 and 2024 depending on who was being asked. Some people had vastly different ideas of what they would need versus the amount others thought was necessary to retire comfortably, and it really broke down a lot by generation. 

Fluctuating requirements make a lot of sense since people who are in their later decades and not working require a lot less to sustain their lifestyles than those who are raising children while trying to save for their future retirement. 

Those just entering the job market have a very different view of what they’ll need in their bank accounts by the time they hit 65 than those who are in their 70s and have come to the end of their most productive working years. 

Still, every generation in both 2023 and 2024 thought it needed somewhere in, or close to, the seven figures range before they believed that could retire, and the funny thing is, not a single group of Americans seems to be properly saving for their future target goals.

The annual Planning and Progress Study from Northwestern Mutual does a lot more than just look at how much Americans think they’ll need for retirement, it also goes into a whole host of details about the financial lives of the country's citizens. 

Most notably, every year Northwestern Mutual investigates what Americans have saved for the day they retire and it turns out that most people haven’t saved anything close to what they think they'll need for their retired life. 

This trend gets worse as people age with the average person of retirement age lacking roughly 80% of the cash they think they need in order to retire in comfort. Let’s take a look at what each generation in 2024 expects they'll need to retire and what they've actually tucked away so far. 

Amount saved for retirement currently: $22,800

Amount expected to need to retire comfortably: $1.63M

Gap between retirement goal and current savings: $1.61M

Photo by Hannah Busing on Unsplash

Amount saved for retirement currently: $62,600

Amount expected to need to retire comfortably: $1.65M

Gap between retirement goal and current savings: $1.59M

Photo by Austin Distel on Unsplash

Amount saved for retirement currently: $108,600

Amount expected to need to retire comfortably: $1.56M

Gap between retirement goal and current savings: $1.45M

Photo by Jason Goodman on Unsplash

Amount saved for retirement currently: $120,300

Amount expected to need to retire comfortably: $990K

Gap between retirement goal and current savings: $870K

Photo by Tim Mossholder on Unsplash

Amount saved for retirement currently: $88,400

Amount expected to need to retire comfortably: $1.46M

Gap between retirement goal and current savings: $1.37M

Photo by Rajiv Perera on Unsplash