Have I Saved Enough?
By Steve Tepper, CFP®, MBA, and ChatGPT
“Are you on track to retirement?” This question is right up there with the most important questions to ponder when you think about your lifelong financial goals, if not the most important. Unsurprisingly, most Americans would answer the question with a resounding “no,” as a 2022 study from Northwestern Mutual confirms.[1] Forty-three percent of people who participated in the study said they don’t think they will have enough money for retirement. And an even larger number (45%) say Social Security may not even exist in the future.
How are people dealing with this impending crisis of confidence? Many have adjusted their expected retirement age, which rose from 62.6 years old to 64 from 2021 to 2022. Only 40% have put together a financial plan or work with a financial advisor, while 36% have no plan of action.
But while 62% of respondents admit they need to improve their financial plan, only 35% seek the help of a financial advisor.[2]
According to Fidelity, you should have 10 times your income in retirement savings by age 67 to retire comfortably.[3] That goal could vary wildly depending on your unique financial circumstances, but at least it can help put a target dollar figure in the plan, so let’s go with it for now.
Fidelity further breaks down the goal and says you should have saved one times your salary by age 30, three times by age 40, and six times by age 50. They calculate this can be done by putting 15% of your salary into retirement savings starting at age 25 and keeping more than half invested in stocks.
If those numbers seem lofty and far beyond your progress, you are not alone. According to the Federal Reserve, only 35% of Americans age 30-44 felt their retirement savings were on track, and only 51% of those older than 60.[4]
In fact, according to a report by the Economic Policy Institute in 2021, the median retirement savings for all working-age families (32-61 years old) in the United States is $21,000, while the mean retirement savings is $163,577. The second number is heavily skewed by high-income earners who tend to have much larger retirement savings.[5]
When looking specifically at those nearing retirement age (age 56-61), the median retirement savings is still just $21,000, and the mean is $167,000.
It shouldn’t come as a big shock that more people feel they are on track if they have a plan in place and/or work with a financial advisor. If you’re working with us in that capacity and we haven’t reviewed your financial goals and progress lately, give us a call! If you aren’t a client or have a family member or friend who isn’t, also give us a call! We’re here for you.
Footnotes:
Northwestern Mutual Study Finds Americans Now Believe They Will Need $1.25 Million for Comfortable Retirement, PR Newswire, Oct. 25, 2022
The Majority of Americans Say Their Financial Planning Needs Improvement, But Only a Third Seek Professional Help, PR Newswire, Jul 27, 2022
How much do I need to retire?, Fidelity Viewpoints, Aug 27, 2021
Federal Reserve’s Report on the Economic Well-Being of U.S. Households in 2019 Featuring Supplemental Data from April 2020, May 2020
ChatGPT, “How much has the average person saved for retirement?”