To feel ‘comfortable,’ Americans think they need... nearly $1.3M for retirement

[LateToFIRE]

https://www.cnbc.com/2023/07/24/americans-have-big-number-goals-for-salary-retirement.html

CNBC Money: "To feel ‘comfortable,’ Americans think they need a $233,000 salary and nearly $1.3 million for retirement."

Goes on to say: "To feel financially secure or comfortable, Americans say, they would need to earn $233,000 on average, a recent Bankrate survey found. But to feel rich, respondents said they would need to earn $483,000 per year on average, the June survey of more than 2,500 adults found."

And "Meanwhile, to retire comfortably, Americans have another big number in mind — $1.27 million — according to recent research from Northwestern Mutual. That is an increase from $1.25 million cited last year, according to the firm’s recent survey of more than 2,700 adults."

Hmm, I think of course this could vary a lot by regional cost of living, and for retirement could certainly vary a lot depending on other income streams (ex. pension), SS, etc.).

Have seen FIRE numbers far less than these and in some cases far more on this forum.

What do you folks think?

 

[HF63]

I retire 8 years ago w/ a lot less than those numbers and about to turn 60 on October.


I guess in life is all about wants and needs in life. I have a very simple life and that works for me here in the US or when I am in Mexico.

 

[MarieIG]

It depends on your cost of living, debt, age and income.

One of my grandmothers lived in a rent-controlled apartment and retired on SS. She actually managed to save some money and enjoyed her lifestyle (until she could no longer live alone and was kidnapped by my parents and "forced" to live with us.)

 

[LateToFIRE]

It depends on your cost of living, debt, age and income.

One of my grandmothers lived in a rent-controlled apartment and retired on SS. She actually managed to save some money and enjoyed her lifestyle (until she could no longer live alone and was kidnapped by my parents and "forced" to live with us.)

LOL, "forced to live with us". Yes, I had a grandmother similar to yours - able to retire on SS/Medicare and live independently until mid 80's. I guess that generation could swing it [if they had cheap housing]. Of course, her adult children had to step in occasionally to foot surprise expenses.

Which leads me to my theory that a vast proportion of the American population is basically counting on their children to foot their retirement bill - no one will admit it, but behavior suggests it must be true.

 

[Midpack]

CNBC Money: "To feel ‘comfortable,’ Americans think they need a $233,000 salary and nearly $1.3 million for retirement."

Goes on to say: "To feel financially secure or comfortable, Americans say, they would need to earn $233,000 on average, a recent Bankrate survey found. But to feel rich, respondents said they would need to earn $483,000 per year on average, the June survey of more than 2,500 adults found."

What do you folks think?

I looked at the Bankrate survey. I think "feel" is a useless metric for a survey. While some have probably calculated what they really need, I suspect it's a WAG for too many respondents...useless.

 

[CardsFan]

Anyone else think the two numbers make no sense together? If you think you need $233,000 a year to be comfortable, don't you need WAY more than $1.27 million in retirement savings?

Here in fly over country, $100,000 in income is pretty comfortable, especially with a paid for home.

 

[youbet]

Which leads me to my theory that a vast proportion of the American population is basically counting on their children to foot their retirement bill - no one will admit it, but behavior suggests it must be true.

Nah........ Some, sure. But not the "vast proportion of the American population.........." .

 

[youbet]

Anyone else think the two numbers make no sense together? If you think you need $233,000 a year to be comfortable, don't you need WAY more than $1.27 million in retirement savings?

Agree that those two numbers do not seem to fit with one another.

 

[SJ1_]

https://www.cnbc.com/2023/07/24/americans-have-big-number-goals-for-salary-retirement.html

CNBC Money: "To feel ‘comfortable,’ Americans think they need a $233,000 salary and nearly $1.3 million for retirement."

Goes on to say: "To feel financially secure or comfortable, Americans say, they would need to earn $233,000 on average, a recent Bankrate survey found. But to feel rich, respondents said they would need to earn $483,000 per year on average, the June survey of more than 2,500 adults found."

And "Meanwhile, to retire comfortably, Americans have another big number in mind — $1.27 million — according to recent research from Northwestern Mutual. That is an increase from $1.25 million cited last year, according to the firm’s recent survey of more than 2,700 adults."

Hmm, I think of course this could vary a lot by regional cost of living, and for retirement could certainly vary a lot depending on other income streams (ex. pension), SS, etc.).

Have seen FIRE numbers far less than these and in some cases far more on this forum.

What do you folks think?

What sticks out to me is if you need a $233,000 per yr. salary you better have a LOT more than $1.25 million saved in retirement.

 

[Gumby]

I looked at the Bankrate survey. I think "feel" is a useless metric for a survey. While some have probably calculated what they really need, I suspect it's a WAG for too many respondents...useless.

"Feel" is useless for almost anything.

 

[LateToFIRE]

A couple folks pointed out the disconnect between the $233K salary need and the $1.3M retirement need, even adjusting for SS. Yes, I also noted the discrepancy, which suggests an awful lot of people have no idea how to estimate their retirement requirements, or as Midpack kinda noted, the survey participants were simply pulling numbers out of the air.

 

[LateToFIRE]

Nah........ Some, sure. But not the "vast proportion of the American population.........." .

I dunno, a whole lotta aging, middle-income folks I'm related to, and a handful of old friends, seem to be operating on that "hope and prayer" model, which means they are basically going to make it the next generation's problem. Not saying it's intentional, but it's going to be the end result of not being "intentional" or realistic about their financial affairs. I also see these trends in the broader "consume now, pay later" population. DW talks about establishing a commune to house all these friends and relatives and she is only half-kidding, which means she is half-serious

 

[LateToFIRE]

Nah........ Some, sure. But not the "vast proportion of the American population.........." .

To further illustrate: Research by the Federal Reserve shows that one in four Americans (including the 27% who consider themselves retired) have absolutely nothing saved.

And I've found various studies that place the median savings for those between 55 and 64 at a range of $90K to $134K (hard to find consistent data on this stuff). Other studies claim that about 40% of retirees are living on only SS, though I think that one seems a bit overblown - they don't profile living situation like multi-generational housing. Still it suggests that a huge number of retirees will be looking to their adult children for financial support.

 

[dunkelblau]

A couple folks pointed out the disconnect between the $233K salary need and the $1.3M retirement need, even adjusting for SS. Yes, I also noted the discrepancy, which suggests an awful lot of people have no idea how to estimate their retirement requirements, or as Midpack kinda noted, the survey participants were simply pulling numbers out of the air.

According to https://dqydj.com/income-percentile-by-age-calculator/ an individual income of $233k is at the 94th percentile for age 64, and from https://dqydj.com/retirement-savings-by-age/ retirement savings of $1.3M is at the 92nd percentile for age 60-64, so these two numbers seem pretty consistent to me?

 

[youbet]

I dunno, a whole lotta aging, middle-income folks I'm related to, and a handful of old friends, seem to be operating on that "hope and prayer" model, which means they are basically going to make it the next generation's problem. Not saying it's intentional, but it's going to be the end result of not being "intentional" or realistic about their financial affairs. I also see these trends in the broader "consume now, pay later" population. DW talks about establishing a commune to house all these friends and relatives and she is only half-kidding, which means she is half-serious

It was your statement that they're "counting on their kids" that I was questioning. I agree that savings rates, along with the disappearance of DBP's in the private sector, seem to fall short of bringing folks to a satisfactory retirement financial picture. But I don't see the vast majority of Americans counting on their kids, literally, to fill in the gap. I see them as just not "getting it" and will be surprised when their retirement lifestyle includes large cardboard boxes and overpasses. But the culture of multi-generational families staying together and supporting one another in age-appropriate was is long gone I'm afraid. A few exceptions, of course.

 

[LateToFIRE]

According to https://dqydj.com/income-percentile-by-age-calculator/ an individual income of $233k is at the 94th percentile for age 64, and from https://dqydj.com/retirement-savings-by-age/ retirement savings of $1.3M is at the 92nd percentile for age 60-64, so these two numbers seem pretty consistent to me?

Hmmm....

 

[aaronc879]

The $233K income is crazy to me. I have never even made $50K in a year in 25 years of working and i'm doing fine. I could retire with well under $1.25M and be very happy anywhere in the country if my house was paid off. My base spending is less than $15K/yr so I don't need much to retire. Even a bare bones retirement would result in much more happiness than having more money but having to work years longer. YMMV

 

[retire48in2018]

It’s not about actual percentiles.

I am familiar with quite a few that make those 250-450k income. Many of them do not LBYM and live close to paycheck by paycheck.

I suspect those save proportionally to income just as badly as those at 100k or 50k. USA does not LBYM and save

 

[retire48in2018]

They a public survey user has no clue about needing 25x (4% withdrawal rate) for income is quite sad. More of an indictment of how poorly Joe/Suzy Q public are informed/educated about financial planning for future

 

[LateToFIRE]

It was your statement that they're "counting on their kids" that I was questioning. I agree that savings rates, along with the disappearance of DBP's in the private sector, seem to fall short of bringing folks to satisfactory retirement financial picture. But I don't see the vast majority of Americans counting on their kids to fill in the gap. I see them as just not "getting it" and will be surprised when their retirement lifestyle includes large cardboard boxes and overpasses.

We're circling the same ideas - I think you're generously attributing the problem to people's lack of awareness, and I'm somewhat less generously attributing it to avoidance of reality. Somewhere in here this whole thing is wrapped up in structural and societal forces working against people having good knowledge, discipline, and resources.

 

[Yipper]

They a public survey user has no clue about needing 25x (4% withdrawal rate) for income is quite sad. More of an indictment of how poorly Joe/Suzy Q public are informed/educated about financial planning for future

This is one of my biggest complaints about our education system and curriculum. Yeah, retirement is a LONG way off for our high school and college aged population but the earlier we make them aware of the importance of saving the better. Enough with a bunch of the other fluff that's seeped into the modern curriculum, spend at least SOME amount of time on practical adulting skills. </Rant>

 

[Time2]

"Feel" is useless for almost anything.

But it's very popular now a days.

 

[EarlyandLate]

"Feel" is useless for almost anything.

I "feel" that I should be a billionaire because I would be better at it than Elon Musk.

 

[EarlyandLate]

According to https://dqydj.com/income-percentile-by-age-calculator/ an individual income of $233k is at the 94th percentile for age 64, and from https://dqydj.com/retirement-savings-by-age/ retirement savings of $1.3M is at the 92nd percentile for age 60-64, so these two numbers seem pretty consistent to me?

What people are commenting is that the two numbers do not make sense as a mathematical reality. What the statistics you quoted about peoples' current situations say is that most people fail to understand that mathematical reality.

 

[LateToFIRE]

...My base spending is less than $15K/yr so I don't need much to retire...

I'm sorry, have lived in a VHCOL region all my adult life. I can't fathom how is $15K/yr base spending even possible anywhere in the U.S.?