As Americans grapple with the rising cost of living, younger generations are facing increasingly daunting retirement savings goals. A recent study by Northwestern Mutual reveals that Gen Z and Millennial workers expect that they will need to save more than $1.6 million by the time they reach 65, based on current rates.
The study found that the “magic number” for retirement savings has skyrocketed 53% since 2020, reaching an all-time high of $1.46 million. This figure represents a significant increase from the $951,000 estimate just four years ago.
For those with higher incomes, the savings target is even more challenging. Individuals earning above the national average may need to save as much as $4 million to maintain their current lifestyle after entering retirement.
Despite these ambitious goals, the average amount that U.S. adults have saved for retirement has slightly decreased from $89,300 in 2023 to $88,400 today, more than $10,000 off its five-year peak of $98,800 in 2021.
“In 2023, the soaring cost of eggs in the grocery store symbolized inflation in America. In 2024, it’s nest eggs,” explained Aditi Javeri Gokhale, chief strategy officer, president of retail investments and head of institutional investments at Northwestern Mutual. “People’s ‘magic number’ to retire comfortably has exploded to an all-time high, and the gap between their goals and progress has never been wider. Inflation is expanding our expectations for retirement savings, and putting the pressure on to plan and stay disciplined. Making a ‘magic number’ appear isn’t about waving a wand; it’s about using time-tested techniques and learning from a skilled advisor.”
The study’s findings underscore the growing concerns among younger generations about their ability to save enough for a comfortable retirement. As the cost of living continues to rise, the pressure to start saving early and maintain a disciplined approach to retirement planning is becoming increasingly evident.
