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.