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 by Money Talks News founder Stacy Johnson and designed for folks between the 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.”