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Published: Jun 23, 2023 5 min read
Photo Collage of an older couple embracing at the beach where the sky is filled with ones and zeros from a dollar bill
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As Americans expect to live longer lives, the anticipated price tag of a comfortable retirement continues to climb.

On average, Americans say they’ll need at least $1.27 million to afford a comfortable retirement in which they can relax, spend time with family and travel. But the amount they have saved up is a far cry from meeting those expectations, according to new research from the financial firm Northwestern Mutual.

This chasmic difference is known as the retirement gap, and separate research by Pew suggests that the cash shortfall could end up costing taxpayers over $1.3 trillion in the long run.

"The good news is that they are saving and investing more for tomorrow, even in this time of high inflation and market volatility,” Aditi Javeri Gokhale, Northwestern’s chief strategy officer, said in a news release Thursday.

Nevertheless, "there continues to be a big disparity between what they think they'll need to retire and what they've saved to date," he added.

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What the research says

In Northwestern’s latest Planning & Progress study, the firm sheds new light on the retirement gap as well as Americans’ hopes, dreams and fears for their golden years.

  • The average amount adults have tucked away for their retirement increased 3% this year to $89,300 — up from $86,869 last year.
  • At the same time, the expected price tag of a comfortable retirement is also increasing. In 2023, American say they will need $1.27 million to retire comfortably. Last year, they said $1.25 million.

Depending on the age group of the respondent, these numbers vary widely.

  • People in their 20s say they’ll need $1.2 million; 30-somethings say $1.44 million. People in their 50s say $1.56 million — the largest amount reported on average.
  • Likewise, the money those age groups have already saved up ranges considerably. The survey's youngest respondents have, unsurprisingly, the least socked away for retirement.

Here’s a look at how much each age group has saved for retirement — and what they think they’ll need, on average:

  • 20s: believe they will need $1.2 million to retire comfortably. Their actual savings is $35,800.
  • 30s: say $1.44 million is needed to retire comfortably; they have $67,400 saved up.
  • 40s: say a comfortable retirement will cost $1.28 million. Their average retirement savings is $77,400.
  • 50s: say they need $1.56 million to retire comfortably, the highest of all age groups. They've socked away $110,900, on average.
  • 60s: believe $968,000 will grant them a comfortable retirement. Their savings is $112,500.
  • 70s: report that they will need $936,000 to afford a comfortable retirement. They have the largest savings of $113,900.

On average, Americans say there’s a 45% chance that they’re going to outlive their savings, yet a third of them said they haven’t taken any steps to avoid that possibility, Northwestern Mutual found.

The survey was based on responses from more than 2,700 U.S. adults in February and March.

The upshot

The so-called retirement gap is still pretty sizeable, but the average American’s retirement savings is finally on the rebound.

Recent reports from investment firms Fidelity and Vanguard found that the average 401(k) balance plummeted more than 20% in 2022, amid abysmal stock market performance. And Northwestern’s Planning & Progress study from last year found that the average retirement savings fell from $98,800 in 2021 to $86,869 in 2022; a dip of 11%.

However, markets have performed impressively in the first half of this year — and may continue to rally throughout the remainder of 2023.

Northwestern’s latest report suggests that as the stock market recovers from the beating it took last year, so are people’s retirement savings.

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