Most Americans believe they’ll need an average of $1.7 million to retire, according to a new study from Charles Schwab. Researchers analyzed 1,000 401(k) plan participants across the country.
“The bulk of folks do not get there,” Nathan Voris, a managing director at Schwab Retirement Plan Services, told CNBC.
More than half of respondents surveyed say they are contributing 10% or less of their salary to their 401(k), which is the largest source of retirement savings. The average annual contribution is $8,788, according to the Charles Schwab study.
But that likely won’t be nearly enough if you started saving later on life, the study finds. A person in their 20s who saves 10% to 15% of their salary each year likely would have enough to retire comfortably whereas a person who doesn’t start until age 45 or older would need to set aside up to 35% of their salary annually, according to the study.
Yet, two-thirds of U.S. workers surveyed by the Employee Benefit Research Institute say they are “very” or “somewhat confident” that they’ll have enough to live comfortably throughout retirement. But only 42% have used retirement calculations to estimate how much they’ll actually need.
Source: “For Most Americans, $1.7 Million Is the Magic Retirement Number,” CNBC (July 6, 2019)