If you’re like a lot of people, you may not think you’ve saved enough money for retirement. A recent report says that the COVID-19 pandemic has shifted a lot of people’s views on how much they think they’ll need.
The 2021 Planning & Progress Study from the financial services group Northwestern Mutual examines Americans’ behavior and expectations toward money including retirement savings and projected financial needs during retirement.
How Much Money Do You Think You Need for Retirement?
The study, which includes answers to a survey of 2,320 U.S. adults, was conducted between March 16 and 26, 2021, by The Harris Poll on behalf of Northwestern Mutual.
Here are some key findings from the study:
- 35% of survey respondents say that the pandemic has caused them to move their target retirement age earlier or later.
- Almost a quarter (24%) have pushed back their target retirement age, while 11% have moved it forward.
How Much Have People Saved for Retirement?
Americans have saved an average of $98,800 for retirement, up from $87,500 last year, the report brings out.
One of the ways you can find out how much you need to save for retirement is by using this Retirement Savings Calculator from Schwab. By entering your information, you can see the following:
- How much money you’ll need to save to meet your retirement goal
- The age you’ll need to claim Social Security
- How much money you can comfortably spend annually in retirement
How Much Do People Expect They’ll Need for Retirement?
In just one year, people’s expectations of how much money they’ll need to live comfortably in retirement have risen from $950,800 to $1,047,200, according to the report.
To match their goals, many have put together strategies that allow them to fund their retirement automatically:
- 26.5% plan to lean on their 401(Ks).
- 26.5% aim to rely on Social Security benefits.
- 23.8% plan to focus on personal savings or investments.
With Social Security, money expert Clark Howard recommends, if you can afford to do so, that you hold off on claiming your benefits. That’s because how much you’ll get increases by 8% until you reach age 70.
To find out how much you’ll need for retirement, Fidelity Investments says to follow these simple salary rules:
- By age 35, you should have twice your annual salary saved.
- By age 40, you should have three times your annual salary.
- By age 67, you should have 10 times your annual salary saved.
What’s the Average Age People Plan To Retire?
Overall, the average age people expect to retire is 62.6, according to the report. This figure is down from 63.4 in 2020.
For those planning to delay retirement, here are their projected timelines:
- Most (39%) plan to hold off on retiring for three to five years.
- 35% have pushed retirement back more than 10 years.
For those planning to move up their retirement, here are their projected timelines:
- 48% plan to retire three to five years earlier than previously planned.
- 42% of them cite spending more time with loved ones as they reason they’re moving up their retirement.
The world’s economic situation continues to cause anxiety for many, but it’s important to remember that you can take control of your finances now and for the future. When it comes to saving for retirement, Clark says that feeling guilty about how much you’ve stashed away is not helpful.
“Whatever you’ve been able to do, whatever you’ve done, that’s what you’ve been able to do up to this point,” Clark says. “From here, it’s all about where you are now and how you’re going to move forward.”
Want to learn more? Follow Clark Howard’s guide to investing for retirement.