The latest Northwestern Mutual 2024 Planning & Progress Study highlights a significant surge in Americans’ retirement aspirations, far outpacing inflation rates. According to the study, Americans now believe they need a staggering $1.46 million to retire comfortably, marking a 15% increase from the previous year and a remarkable 53% surge since 2020.
Rising Retirement Expectations
The study reveals a concerning trend where Americans’ retirement expectations are skyrocketing while their actual savings fall short. Despite the growing need for substantial retirement funds, the average retirement savings have modestly declined, currently resting at $88,400, down from a five-year peak of $98,800 in 2021.
Breaking down the findings by generation, it’s evident that both Gen Z and Millennials foresee needing over $1.6 million to retire comfortably, while high-net-worth individuals suggest a requirement of nearly $4 million. Moreover, there’s a notable generational gap in the age at which individuals started saving for retirement, with Gen Z commencing at 22, nearly a decade earlier than Boomers+.
With the impending ‘Silver Tsunami,’ where over four million Americans will turn 65 in 2024 alone, concerns about financial preparedness loom large. The study highlights that only half of Boomers+ and Gen X feel financially ready for retirement. Additionally, there’s a palpable fear among Gen X and Boomers+ about outliving their savings, with a significant portion having made no preparations for this possibility.
The study underscores the importance of tax planning in retirement strategies, with just 3 in 10 Americans believing they have a tax-efficient retirement plan. Strategies such as strategic withdrawals, charitable donations, and utilizing tax-advantaged accounts emerge.
The 2024 Planning & Progress Study will delve further into various issues affecting Americans’ financial well-being, including savings, debt, retirement income, and technological advancements. As Americans navigate these challenges, Northwestern Mutual continues its mission to help individuals and businesses achieve financial security through comprehensive planning and innovative solutions.
