Story at a glance
- A recent study from financial services company Northwestern Mutual found that people expect to need 20 percent more money to retire compared to what U.S. adults thought they needed last year.
- Now, U.S. adults think they will need $1.25 million in savings to retire comfortably.
- The study also found that most U.S. adults are planning to retire later.
American adults think they will need $1.25 million in savings to retire comfortably representing a 20 percent increase since 2021, according to a new study from financial planning company Northwestern Mutual.
The study released earlier this week also notes that average amount of retirement savings for U.S. adults has decreased by 11 percent since last year, dropping from $98,800 to $86,869.
“It’s a period of uncertainty for many people, driven largely by rising inflation and volatility in the markets,” said Christian Mitchell, executive vice president 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.”
At the same time, the expected retirement age has gone up in the U.S., according to the study.
Now, the average U.S. adult is planning on working until they reach 64 years of age, while last year the average age people expected to retire was 62.6.
The study’s findings that more people are expecting to retire later coincide with an increase in the age at which retirees can collect full social security benefits.
While people can still begin to collect retirement benefits at 62 adults will not be able to receive full retirement benefits until age 66 or 67.
But four in 10 people that took part in the study don’t think they will be ready to retire by then anyways.
The study found “low levels” of confidence among U.S. adults concerning how prepared they felt for retirement an even larger portion of U.S adults lack faith that Social Security benefits will always be there for older adults.
The study found that 45 percent of adults can imagine a time when Social Security no longer exists.