The amount of money workers say they will need to feel financially secure when they retire keeps ratcheting up.
In a new study published by Northwestern Mutual, Americans’ magic number to “retire comfortably” jumped to $1.46 million, up more than 15% from last year and topping the $1.25 million they thought they would need four years ago.
It’s moving up for several reasons, Keller Lindler, a financial adviser at Northwestern Mutual, told Yahoo Finance.
“We’re hearing concerns about inflation, uncertainty about Social Security, and emerging worries about the impact that AI may have on careers and people’s ability to work and save,” Lindler said.
Of course, no one wants to outlive their savings, and that possibility is already top of mind for many workers. Nearly half of those who have yet to retire say they don’t expect to be financially prepared and believe there’s a good chance they’ll outrun their savings, according to this report.
When workers with more than $1 million in investable assets tossed a dart at what they would need to save to step away from paid work, that sweet pot jumped to $2.67 million on average.
“Every American has their own number that’s right for them, based on where they live, what lifestyle they want, and their dreams,” Lindler said. “It’s helpful to hear what others think they might need to retire comfortably, but our best advice is to create a personalized plan for your own life.”
Despite their retirement savings targets moving higher, nearly a quarter of those with retirement savings say they have one year or less of their current annual income set aside for it, according to the research.
Gen Xers, who are nearing retirement with the oldest members turning 61 this year, are the least confident age group in terms of their retirement preparedness, but their picture is getting brighter.
About half of Gen Xers have four times their current annual income or more saved, up from 41% last year. And nearly half of Gen Xers say they expect to be financially prepared for retirement when the time comes — up slightly from last year.
So how much should you be saving? In general, you should shoot to have 10 times your pre-retirement income saved by the time you reach age 67, according to the financial advisers I spoke to.
Someone with, say, a $100,000 salary should have $1 million saved by the time they retire. To break that down, Fidelity, for instance, recommends that by age 30, you have the equivalent of one year’s salary saved. By age 40, 3x your income. By age 50, 6x your income, and by age 60, 8x your income.