More working Americans say they’ll have to save over a million dollars in order to retire comfortably, despite actually expecting less when the time comes to retire, according to a new retirement survey by Schroders.
The survey found working U.S. adults ages 45 and older believe it will take close to $1.1 million dollars in savings to retire, yet only 21% expect to reach that mark. In fact, 59% say they expect to have less than $500,000 saved, and 34% forecast less than $250,000 in savings.
Millennial workers surveyed believe it will take about $1.3 million dollars for them to retire comfortably, but only 29% say they expect to reach over a million in retirement savings. Instead, almost half (49%) say they anticipate to have less than $500,000 saved, including 27% with less than $250,000 in savings by retirement, finds Schroders.
Of those who are nearing their golden years but not yet retired (in the 60 to 67-year-old range), Schroders found 24% say they do not have enough money to retire.
Americans losing sleep amidst market recession rumors
Amid growing concerns of a market recession, more Americans are losing sleep over stress related to their finances and retirement. The majority of older workers (56%) and working Millennials (55%) said the current stock market has greatly increased their anxiety. Almost half (49%) of Millennial workers have lost sleep worrying about their financial situation, as have 40% of workers 45 and older. Almost two-thirds (64%) of working Millennials and 53% of older workers are concerned that financial stress will negatively affect their overall health.
Among working Americans, 85% of Millennials said they worry each day about money; and those that do spend on average 1.9 hours per day or about 13 hours a week worrying. This calculates to approximately 28 full days a year worrying about money.
Of workers ages 45 and up, 69% said they worry each day about money; and those that do spend on average 1.6 hours or about 11 hours each week. This amounts to approximately 24 days a year worrying about money, according to Schroders.
“It’s amazing the amount of sleep that people are losing,” said Joel Schiffman, head of Strategic Partnerships at Schroders. The need for a plan, the need for education and the need to work with an advisor to help bring this all together has never been greater.”
U.S. adults allocating to cash
Schroders found almost half (48%) of working Millennials and 50% of older workers with a workplace retirement plan like a 401(k) believe the performance of their plan in 2022 has caused them anxiety.
Further, almost two-thirds (64%) of working Millennials and 62% of older workers with workplace retirement plans worry they won’t be able to grow their workplace retirement plan assets to the level they hoped to achieve.
When looking at how Americans are allocating their retirement investments, the survey revealed a significant amount are allocating to cash due to fears of losing money (62% of working Millennials and 66% of older workers). It’s no surprise, given impending rumors of a market recession and even the recent fall of Silicon Valley Bank and other organizations.
While those who keep cash believe it to be safer strategy, Schiffman warns of its own consequences. For example, current inflation levels erode the actual spending power of cash, he says. “Working with an advisor and understanding that there is a long-term benefit to being in the markets, and again, you must balance it with your tolerance of risk,” he continued.
This is especially true for Millennials, who have several decades to go before reaching retirement. “That’s a really good starting point to understand about building a plan, saving, working with an advisor, getting the right asset allocation for your funds as you’re accumulating, and one that balances to your comfort level but also to risk vs. return,” he said.“Recognizing that as a young person, you have decades to accumulate assets and even as you’re older. Asset allocation still plays a critical role in getting more for your money.”
SEE ALSO:
- Women’s Retirement Savings Suffer Due to Wage Gap
- Saving for Retirement: No One Size Fits All
- Over 80% of Americans Halted or Withdrew from Retirement Savings in 2022
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
