Americans say they will need $1.27 million to live comfortably in retirement, which is slightly more than the $1.25 million they said they needed last year, according to a Northwestern Mutual survey.

They also admit they’re nowhere near saving that much: Respondents in their 50s had saved only $110,900 at the time of the survey, and those in their 60s saved $112,500. And on average, respondents across all age groups said there’s a 45% chance they will outlive their savings.

“The good news is that they are saving and investing more for tomorrow, even in this time of high inflation and market volatility. That is a step in the right direction and a reverse of what we saw last year when the gap widened rather than narrowed,” wrote Aditi Javeri Gokhale, Northwestern's chief strategy officer, head of institutional investments and president of retail investments. “The challenging news is that there continues to be a big disparity between what they think they’ll need to retire and what they’ve saved to date.”

Milwaukee-based Northwestern Mutual’s 2023 Planning & Progress Study included 2,740 online interviews of U.S. adults between February 17 and March 2. Also included were high-net-worth individuals with more than $1 million in investible assets, the survey said, and the data was weighted to Census targets for education, age, gender race/ethnicity, region and household income.

On average, respondents said they planned to work until age 65, up from 64 last year and 62.1 in 2021, although participants who self-identified as “undisciplined” in their retirement savings said they would need to work to 67.

Given the low savings level, only 45% of Gen X respondents said they thought they’d be financially prepared for retirement, and that percentage rose to 54% for Millennials and to 65% for Gen Z. Only 52% of Boomers said they thought they’d be financially ready.

A full 33% of those surveyed said they hadn’t done anything to address a retirement income shortfall.

“When you look at the fact that one third of people haven’t taken any steps to address outliving their assets, retirement can seem really scary,” said Chris Collins, wealth management advisor at Collins Financial, a firm in the Northwestern Financial Private Client Group that does comprehensive financial planning in Addison, Texas.

“When we work with clients, the questions we ask are how much more in core critical assets do you need to support the lifestyles you want? Do you have it? And if not, how can we get it,” he said. “If income needs are higher, then people can either save more or work a little longer. Those are the levers we can work with.”

And it’s not surprising, Collins said, that the two biggest fears of respondents were the declining health that usually accompanies retirement (44%) and outliving savings (43%). Those figures went hand in hand with expectations that now 28% of American think it’s likely they’ll live to 100.

So how do Americans think their retirement will be funded?

According to the survey, respondents said that 401(k)s and other retirement accounts and Social Security together will account for 56% of the income needed in retirement (each source contributing 28%). Personal savings and investments will contribute 22%. Support from a spouse/partner (8%), inheritance (6%), support from children (3) and “other” (6%) account for the remaining need.

“Outliving resources is the number one concern,” Collins said of his clients. “When we look at client savings, we want three to five years of expenses in a reserve, somewhere safe like bonds, for liquidity. And then we’re looking for guaranteed income for fixed needs. If there’s an income gap, we might want to bring up the scary word ‘annuity’ and turn savings into a pension plan.”