The ability to retire comfortably feels hard to reach these days, and for some, it may be impossible. Nowadays, retirement planning poses thorny challenges, such as the funding shortfall for Social Security and Medicare, an aging population and inflation. Americans believe they will need nearly $1.5 million in the bank for a secure retirement, according to Northwestern Mutual’s 2024 Planning & Progress Study. That’s a 15% increase from 2023 — far outpacing the 3% to 5% inflation rate over last year — and up 53% from 2020.
That number falls far short of the average amount that U.S. adults have saved for retirement — a meager $88,400 in 2024, compared to $89,300 in 2023. Given that 11,000 Americans will turn 65 every day through 2027, only half of Boomers and Gen Xers believe they’ll be financially ready for retirement when the time comes.
Whether you are a 401(k) millionaire or a young person just starting to save for retirement, knowing how your savings compare to your generation's expectations can be helpful. The study also provides insight into how much high-net-worth individuals think they need to save.
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Can Boomers retire comfortably?
Per the study, only about half of Boomers (49%) believe they will be financially prepared for retirement. One reason may be the fear of a recession, even in the new year. In 2024, 48% of boomers surveyed expected the United States to enter a recession. That's down from 60% in 2023.
Although Americans overall feel they need $1.46 million to retire comfortably, Boomers expect to need $990K. That's a far cry from the $120,300 they currently have saved. In addition, 37% of Boomers feel they will likely outlive their savings.
Despite high levels of financial insecurity, many Boomers (35%) expect to reduce their spending on discretionary items like restaurants, vacations, and entertainment in 2024. However, 42% say they will spend about the same as in 2023. According to the Allianz Life New Year's Resolutions Study, financial stability is always a top priority, and it will be for 33% of Boomers in 2025.
Gen Xers
Like Boomers, almost half (48%) of Gen Xers believe they will be financially prepared for retirement, and 42% worry they could outlive their savings. The Allianz study also showed that 37% of Gen Xers will prioritize financial stability in the new year.
The magic number that most Gen Xers feel they need to retire is $1.56 million. This is much higher than the average amount they have saved — $108,600 — and higher than most Americans feel they will need. In short, Gen X retirement is in trouble.
Although nearly all Americans have some kind of debt, high-interest credit card debt is the main source of debt for 30% of Gen Xers. To make matters worse, more than four in ten, or 42% of Gen Xers (43% of Millennials) say their personal debt is at or near its highest level ever.
Gen Xers are also the least likely generation to map out a plan to fund a comfortable lifestyle once they retire, with half (48%) of Gen Xers saying they have not done any retirement planning. That's according to a recently released Schroders 2024 U.S. Retirement Survey. This lack of planning exceeds the 41% of Millennials and Baby Boomers who say they don't have a retirement savings game plan.
| Header Cell - Column 0 | Boomers | Gen X |
|---|---|---|
| I know how much money I will need to retire comfortably | 49% | 40% |
| I have a plan to address healthcare costs in retirement | 56% | 44% |
| I have planned for the possibility that I could outlive my savings | 37% | 35% |
| I have a plan to address long-term care needs in retirement | 41% | 34% |
| I have planned for the potential that Social Security may or may not be in place when I qualify for it | 39% | 42% |
| I will have enough to leave behind an inheritance or gift. | 50% | 36% |
| I have a good understanding of how taxes could impact my retirement | 58% | 46% |
| I have a good understanding of how potential drops in the stock market could impact my retirement | 58% | 51% |
Are Millennials prepared? (or not so much)
The plan for those who favor protecting their retirement mostly focuses on cutting costs (56%) and building savings (51%). Younger generations score high on adding a side hustle — 43% for Millennials — and about one in six Millennials (16%) said they would get a financial advisor. In comparison, 15% said they would buy or increase life insurance coverage.
Gen Z and Millennials expect to need more than $1.6 million to retire comfortably. And although a long way from leaving the workforce, the survey showed Millennials currently have just $62,600 saved, a gap of $1.59 million between what they feel they need and what they have saved. On a positive note, the research also revealed that three in 10 Millennials believe it’s likely or highly likely that they will live to age 100, giving them time to make a plan to make up the difference.
Gen Z are not slackers
On average, American adults say they started saving for retirement at age 31. But Gen Zers say they began at age 22 — nearly a decade earlier, hoping that starting earlier will help them reach their retirement goals sooner. That is also a full 15 years before Boomers, who say they started when they were 37. Millennials and Gen Xers began saving for retirement at ages 27 and 31, respectively.
“In 2023, the soaring cost of eggs in the grocery store symbolized inflation in America. In 2024, it’s nest eggs,” said Aditi Javeri Gokhale, Northwestern Mutual's chief strategy officer, president of retail investments, and head of institutional investments. “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.”
How prepared are high net worth individuals?
High-net-worth individuals — those with more than $1 million in investable assets — say they’ll need nearly $4 million to retire comfortably, according to the survey. Yet, nearly half (48%) of American millionaires believe their financial plans need improvement.
HNW individuals are far more likely to exhibit feelings of financial preparedness than the general population. It makes sense, as more of them have high levels of financial literacy.
| Header Cell - Column 0 | HNW Individuals | General Public |
|---|---|---|
| I have good clarity on exactly how much I canspend now vs save for later | 87% | 66% |
| I know how much money I will need to retirecomfortably | 77% | 44% |
| I expect to be financially prepared for retirementwhen it comes | 87% | 54% |
| I have a long-term financial plan that factors forup and down economic cycles over time | 84% | 52% |
| consider myself a disciplined financial planner | 78% | 45% |
One reason for their confidence is that most (69%) of HNW individuals work with a financial adviser, more than double the general population. Overall, they are also more focused on creating intergenerational wealth. Six in ten (61%) high-net-worth Americans say they plan to reduce the taxes they will owe on their retirement savings, giving them more money to spend and leave to their heirs.
HNW individuals also typically save more, spend less, invest wisely and grow in their career over time to invest more money in their 401(k) retirement account as a path to becoming a 401(k) millionaire or multi-millionaire.
How do you compare?
Are you rich? There are a few ways to know how you compare to peers in your generation. For example, the average net worth by age can give you a snapshot of how you measure up. However, the average net worth across generations was $1.06 million in 2022; if that seems much too high, that's because extremely wealthy outliers skew the data upward. A more reliable measure is the median net worth, which was $192,900.
It's not surprising that older Americans tend to have higher net worth. After all, they have spent their entire lives accumulating assets, such as 401(k)s, IRAs, real estate, and equity in their own businesses.
As shown by Kiplinger's Net Worth Calculator, your net worth is comprised of various financial assets, including investments, your home, retirement accounts and cash, versus liabilities, such as money owed on mortgages, home equity loans, credit cards, installment loans, and similar costs.
What about retirement savings? Your 401(k), IRA or other retirement savings are distinct from your net worth. Take a look at the average IRA balance by age and the average 401(k) balance by age.
Investing in a future you
Unfortunately, putting money into a 401(k) or another retirement plan may no longer be enough to retire comfortably. This is especially true if you don't consider the impact of taxes or fees on your retirement income or if you begin contributing later in your career.
If these stressors keep you up at night, sleep better by slaying those retirement fears. Enlisting the help of a financial adviser early on in your career may help you have a happy retirement (and relieve some of that pent-up stress). After all, retirement is a long game that, sooner or later, you’ll be forced to play.
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