Survey: Americans Are Saving More for Retirement This Year, But Still Worry It Won’t Be Enough
One of the major financial impacts of the COVID-19 pandemic is how it has changed the way Americans view retirement. Most believe they’ll need more money to retire on than they previously thought, according to a new survey from Northwestern Mutual, and while the average American has built up a bigger retirement fund this year, many also think they’ll outlive their savings.
On average, working Americans have $98,800 saved for retirement in 2021, up from $87,500 last year, the survey found. But their expectations about how much they’ll need to retire comfortably also has ticked higher — from $950,800 in 2020 to just shy of $1.05 million in 2021.
And while overall retirement savings are up, more than four in 10 respondents (43%) believe they might outlive their savings, which is up from 41% last year.
Among the survey’s other key findings: the average millennial and Gen Z respondents said they plan to retire before the age of 60, while Gen X respondents provided an average expected retirement age of 64.3 and baby boomers gave an average age of 68.3.
The 2021 Planning & Progress Study was conducted in March by The Harris Poll on behalf of Northwestern Mutual. It polled more than 2,300 Americans aged 18 and older. More than one-third of respondents said COVID-19 either moved up or pushed back their target retirement age, with 24% saying they plan to retire later than previously planned and 11% saying they plan to retire earlier.
“It’s clear that plans can unexpectedly change. That’s why it’s so important for people to get started early when it comes to retirement planning,” Christian Mitchell, executive vice president & chief customer officer at Northwestern Mutual, said in a press release.
One positive trend is that Americans are being proactive to better prepare themselves for retirement. Here are some of the steps they’re taking, according to the survey:
- Increasing savings (29%)
- Putting together a financial plan (22%)
- Discussing options with their family (18%)
- Making investments (18%)
- Seeking advice from a financial advisor (18%)
The largest percentage of respondents said they plan to rely most heavily on their 401(k) plans (26.5%), Social Security (26.5%) and personal savings or investments (23.8%) to fund retirement. But nearly one-fifth (19%) don’t believe it’s likely that Social Security will be available when they retire, and 43% say they can imagine a time when Social Security no longer exists.
Most financial experts have a different take, saying that Social Security will still be around well into the future, though they do think benefits will have to be cut for the program to be financially feasible. As previously reported by GOBankingRates, just because benefits might have to be cut doesn’t mean Social Security funds are running out.
Scott Thoma, retirement strategist at Edward Jones, said in an email to GOBankingRates that Social Security could remain fully funded through its 75-year projection period through higher payroll taxes. If no changes are made, he said, benefits would need to be cut by 24% starting in 2034, meaning recipients would still get 76 cents for every dollar of benefits being paid today.
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