If workers' estimates are right, many are likely to fall far
short.
Chris Kissell
• September 18, 2019
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American workers say they need $1.7 million to retire. But many
are at risk of falling short of that lofty goal.
Charles
Schwab’s 2019 401(k)
Participant Survey asked 1,000 workers ranging in age from 25 to 70
how much money they would need to retire.
On the
low end, 4% of workers said they would need less than $100,000 to retire. At
the other extreme, 1% of workers stated they would need $10 million or more.
However,
33% of workers — the largest percentage by far — said they would need between
$1 million and just under $3 million.
The
average of all the answers was a goal of $1.7 million. Yet, many workers are
not saving enough money to reach that daunting level of savings.
In
fact, 51% of survey respondents — all of whom have a 401(k) — admitted to
saving 10% or less of their salary to a 401(k).
Median
household income in the U.S. was $63,179 in 2018, according to the U.S. Census
Bureau. A worker who saves 10% of that amount would contribute
$6,317.90 to a 401(k) account every year.
Investing
that amount at a 7% return over a 40-year working lifetime would result in a
nest egg of roughly $1.3 million. That is a lot of money, to be sure. But it’s
still short of the amount many workers say they need.
Making sure you save enough for retirement
On a
brighter note, the survey found that the average worker who participated in the
survey contributed $8,788 to their 401(k) plan in 2018.
If
those workers stay the course with that level of contribution and are willing
to take a little risk with their money — for example, investing in the stock
market — they might earn enough of a return to get to that average $1.7 million
savings goal.
The key
to amassing such wealth is to start saving early and often. The more time your
investments have to compound, the more likely you are to reach your financial
goals.
Need
help getting started? Consider enrolling in our retirement “boot camp” course, The Only
Retirement Guide You’ll Ever Need.
Created
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ages of 45 and 65, it is a 14-lesson course in everything you need to know
about saving for retirement.
As
Stacy has said before:
“At the
end of the day, the amount we should all put aside for retirement is the most
we can.”
You can
read the course chapter “Social Security
Secrets” for free. If you like what you see, enroll in the course.
It's
time to plan the best years of your life.
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