$1.26 Million: The Average Savings Goal For Retirement—Is It The Best Benchmark?

According to the Center for Retirement Research at Boston College in the United States, women retire at age 62 and men at age 64 on average as of 2024.

Americans were asked in a survey, “What age should you be retiring?. 58 years, was the answer according to a recent Empower research that surveyed 1,001 adults on June 2. Compared to the current average retirement age, that is significantly younger.

According to a 2024 analysis by the Transamerica Center for Retirement Studies in partnership with the Transamerica Institute, 58% of Americans wind up retiring earlier than they had anticipated.

Of those who took early retirement, 46% gave health-related reasons, 43% gave work-related reasons, and 20% gave family-related reasons. Only 21% of respondents claimed that their financial stability allowed them to retire early.

According to some financial advisers, persons who expect to retire at age 58 may be “looking at 30 to 40 years of not working” because people are living longer.

Make sure you have enough saved to last you that long if you want to retire earlier, particularly during recessions and other economic downturns, advised McClanahan, a member of CNBC’s Financial Advisor Council.

“You may end up coming up short [or] not having enough money if you quit work too early,” McClanahan said.

You also need to consider health care, as Medicare typically kicks in at age 65 — if you stop working at age 58, you’ll need to come up with health care coverage for those gap years.

Starting your retirement savings early and aggressively is key to making this goal happen. It’s also crucial to know how much money you need to live on during retirement and how much you’d need to save to get there.

Some Americans wants to retire comfortably with an average savings of $1.26 million, according to an April report by Northwestern Mutual.

While that figure is lower than the prior year’s average of $1.46 million, many of those surveyed said they feel unprepared for retirement. More than half, or 51%, said they think it’s somewhat or very likely they will outlive their retirement savings, according to the report.

Medicare usually starts to pay out at age 65, so you will also need to think about health insurance. If you quit your job at age 58, you will need to find other ways to pay for those years in between.

Older People Aged 65 And Above Are Increasing. Any Implication On The Younger Generation?

To achieve this objective, you must begin saving for retirement early and vigorously. Knowing how much you will need to save to reach your retirement goals and how much you will need to live on in retirement are both very important.

According to a Northwestern Mutual research from April, some Americans hope to have $1.26 million saved for a comfortable retirement.

Many respondents stated they feel unprepared for retirement, even if that amount is less than the $1.46 million average from the previous year. According to the research, 51% of respondents stated that they believe their retirement funds will be outlived either somewhat or very probable.

2.4 million Americans retired during the COVID-19 epidemic, according to data from the Federal Reserve and a different report from financial management company T. Rowe Price. By March 2022, about 1.5 million of the retirees had returned to their jobs.

According to a Transamerica Center for Retirement Studies report released in March, 52% of workers stated that they intend to continue working at least part-time after retirement. Financial considerations were cited by about 80% of respondents who intend to continue working after age 65 or in retirement. Some folks just find retirement really difficult.

In general, working a little bit longer can be advantageous; by delaying the year you start collecting Social Security benefits, you reduce the risk of outliving your savings.

For example, say there’s a 62-year-old who earns $100,000 per year, already has $900,000 saved for retirement and expects to spend roughly $65,000 per year in retirement, according to the T. Rowe Price report.

Credit: CNBC