American’s anticipated cost of retirement keeps going up, with many people now believing they will need $1.25 million for their golden years, according to a new Northwestern Mutual study.

At the same time, the report found that the average retirement savings has dropped 11% from $98,800 last year to $86,869. In 2020, it was $87,500.

“It’s a period of uncertainty for many people, driven largely by rising inflation and volatility in the markets,” Christian Mitchell, executive vice president and chief customer officer at Northwestern Mutual, said in a statement.

The report found that Americans are not feeling optimistic about retirement readiness. Forty-three percent said they do not expect to be financially ready for retirement when the time comes. And 45% are not banking on Social Security always being around.

The report also found that Americans have extended their working years to 64 from 62.6 last year and that one-third expect to live to 100, with another third predicting that there is a 50% chance they will outlive their savings.

Even so, the report found that 36% have not proactively address the possibility of outliving their savings.

Respondents, the report found, are expecting their 401(k) (27%) to deliver in retirement, followed closely by Social Security (26%) and personal savings or investments (22%).

The report found that the pandemic has impacted people’s retirement timelines, as a quarter of Americans said they plan to retire later than they had anticipated, and 15% said they plan to retire earlier.

Fifty-nine percent of hose who have delayed retirement cite working and saving more given the additional flexibility from remote work; 45% percent said they are concerned about rising healthcare/medical costs; 26% said they had to dip into their savings; 24% said they are taking care of a relative or friend; and 18% said they lost their job during the pandemic and have to catch-up.

Forty-four percent of those who plan to retire early cite spending more time with family and loved ones; 34% said they have come to realize that personal mission is more important than saving for retirement; 32% said they can afford it; 28% said they want to focus on priorities ad hobbies outside of work; 22% said they either got laid off or their work situation has changed due to remote work; and another 22% said they were offered a buyout due to the pandemic.

When asked what’s more important, the study found that most adults (60%) prioritize personal fulfillment such as doing something that they care about over salary and income potential (40%) in their careers.

“This is a really fascinating finding and one that advisors should take note of as they work with their clients,” noted Mitchell. “What people prioritize goes well beyond their bottom lines. The best advisors understand their clients’ values and motivations, not just their financial situations.” 

The 2022 Planning & Progress Study was conducted by The Harris Poll on behalf of Northwestern Mutual and included 2,381 American adults aged 18 or older who participated in an online survey in February.