U.S. workers believe they’ll need an average of US$1.26 million in savings to retire comfortably, $200,000 less than the $1.46 million reported last year and nearly flat with 2022 and 2023 estimates, according to a new survey by Northwestern Mutual.
The survey, which polled more than 4,600 workers, found among employees who have retirement savings, a quarter (25 per cent) have just one year or less of their current annual income put aside for it.
Among generation X, half (52 per cent) have saved three-times their current annual income or less and 54 per cent believe they won’t be financially prepared for retirement when the time comes.
Read: Economic volatility, demographic changes among factors shaping retirement plans: survey
More than half (51 per cent) of all respondents said it’s somewhat or very likely they will outlive their savings, while only 16 per cent said the prospect of outliving their wealth is very unlikely. Meanwhile, more than a third (35 per cent) said they haven’t taken any steps to address that potential outcome.
On the topic of social security, only one in four gen-Xers (26 per cent) and baby boomers (27 per cent) said they plan to delay receiving their benefits as long as possible to maximize their monthly benefit. Fewer than half of gen-Xers (46 per cent) and baby boomers (45 per cent) said they plan to start receiving their benefit when they hit their full retirement age.
Two-fifths (40 per cent) of all respondents said they plan to work (or are currently working) during their retirement years, a percentage that increase among millennials (45 per cent) and gen-Xers (48 per cent). Among employees who plan to continue working, half (50 per cent) said they want to continue feeling useful/stimulated and a similar percentage (48 per cent) said they’ll need the additional income to afford retirement.
Among Americans who are currently working or are planning to work in retirement, the majority (59 per cent) said they would work either part time or full time at a different job, while a fifth (20 per cent) expect to pick up a side hustle with flexible hours. Slightly fewer (18 per cent) said they would work part time at the same job they’re currently at.