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Americans said they would need $1.25 million for retirement, compared with last year, when respondents estimated they would need $1.05 million, according to a Northwestern Mutual study. (iStock:)

Americans are reconsidering how much they need to budget for their retirement, and many believe they will need more money to retire comfortably. In a recent Northwestern Mutual survey.

Respondents estimated they would need $1.25 million to feel secure in retirement, up 20 percent from last year, when respondents estimated they would need $1.05 million, the survey said.

However, with inflation and the higher cost of living, Americans are spending more on everything from food to fuel. As a result, average retirement savings fell 11% to $86,869 from $98,800 a year ago, the survey said.

“This is a period of uncertainty for many people, driven primarily by rising inflation and volatility in the markets,” said Christian Mitchell, Northwestern Mutual’s executive vice president and chief customer officer. “We’ve also seen spending increase year-on-year, not only as a result of inflation, but also as people resume a sense of normalcy in their lives after the early days of the pandemic.

“These factors are causing many to rethink their thinking about how much they need to retire and how long it will take to get there,” Mitchell added.

If you’re getting ready for retirement or want to better manage the current rate of inflation, paying off debt is a good place to start. You can contact Credible to speak with a credit expert and get all your questions answered.

MANY AMERICANS ARE CONCERNED ABOUT THE COST IMPACT ON INSURANCE.

Inflation is the biggest threat to retirement savings

Forty-one percent of respondents cited inflation as the most important obstacle to achieving financial security in retirement, while 39 percent blamed the economy.

Inflation remains well above the Federal Reserve’s 2% target. November’s Consumer Price Index (CPI), estimated by the Bureau of Labor Statistics, showed inflation rose 7.1% year over year.

In November, the Fed announced its fourth rate hike of 75 basis points this year, and in December it announced a 50 basis point rate hike in an effort to meet its target. December’s rate hike brought the federal funds rate to a target range of 4.25% to 4.5%, the highest level in 15 years.

“With inflation rising at the fastest rate since the 1980s, many Americans have seen their savings begin to erode and debt levels have risen in recent months,” Mitchell said in September.

If you are planning to retire, you may want to consider using a personal loan to help you pay off debt at a lower interest rate while saving you money each month. You can visit Credible to find your personalized interest rate without affecting your credit score.

GAS PRICES WERE INCREASED DUE TO THE STABILITY OF THE OIL MARKET.

How Americans Are Coping With Retirement Shortfalls

In addition to needing more savings, survey respondents also said they plan to work longer hours. The expected retirement age has risen to 64, up from 62.6 last year, the survey said.

Furthermore, 33% of Americans said they expect to live to be 100 years old. A third of respondents also said they thought there was a chance they could outlive their savings.

In addition to working longer years, Americans said they take these steps to address the possibility of outliving their savings, the survey found.

  • 25% said they increased savings
  • 22% made a financial plan
  • 21% acquired investments
  • 18% discussed options with family
  • 18% sought advice from a counselor
  • 16% purchased insurance

If you are retired or about to retire, paying off personal loan debt can help you lower your interest rate and monthly expenses. You can visit Credible to compare multiple personal lenders and choose the one with the best interest rate for you.

THESE ARE THE TOP RETIREMENT INCOME CONCERNS FOR MOST AMERICANS, POLL:

Have questions about your finances but don’t know who to ask? Send an email [email protected] and your question can be answered by Credible in our Money Expert column.

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