The distance between financial security and your current savings account is likely growing, and new data puts a specific price tag on that disconnect.
According to a recent study by Clever Real Estate, which polled 1,000 retired Americans, the average retiree in the U.S. now believes they need roughly $824,000 to retire comfortably. But retirees have only saved about $289,000, on average.
That leaves a gap of roughly $535,000 — a half-million-dollar shortfall that’s forcing millions of older adults to make impossible choices between their health, homes and daily meals.
The high cost of comfort
Just last year, retirees estimated they needed around $580,000 for a secure retirement. That number has since spiked by over 40%, driven largely by inflation that refuses to cool down in the sectors that matter most to seniors.
At the same time, the average retiree’s savings dropped by roughly $20,000 compared to the previous year.
Roughly 29% of retirees report having no retirement savings at all. For those who do have nest eggs, they’re often too small to withstand the current economic climate.
Where the money goes
How did the target number for retirement savings jump so high so quickly? The answer lies in the specific expenses that dominate a retiree’s budget.
While overall inflation headlines often focus on gas prices or consumer tech, retirees are being hammered by essentials. About 67% of retirees say they’re spending more on groceries than they planned, and 60% are paying more than expected for insurance.
These rising costs are pushing people toward tough decisions. The study found that 14% of retirees have skipped medical appointments to save money, and 12% have skipped meals.
Housing is a big issue
One of the biggest financial stressors for retirees is housing.
Nearly three-quarters of retirees say they would do everything possible to stay in their current homes, even if they can barely afford it. Yet, 49% admit that a drop in home values would derail their long-term financial plans.
This refusal to downsize or relocate to a lower-cost area is a significant risk. By holding onto an asset they can’t afford to maintain, many are draining liquidity that could otherwise cover medical bills or groceries.
Closing the gap
If you’re looking at these numbers and seeing your own situation reflected, don’t panic. Instead, consider how you can aggressively make adjustments.
Here are some of the variables where you have more control:
- Rethink housing: If you have equity in a home you’re struggling to maintain and pay for, that equity is dead money until you unlock it. Downsizing before a crisis forces your hand can add substantially to your coffers.
- Delay the claim: If you haven’t claimed Social Security yet, waiting remains the guaranteed way to increase your monthly income for life. Learn more about how to decide when to claim here.
- Audit spending: You may be surprised at what you can cut back on. Learn more in our recent coverage, “8 Expenses That Retirees Regret Not Cutting Sooner — and Why.”
The $535,000 gap is daunting, but it’s an average, not a destiny. The sooner you adjust your lifestyle to match your liquidity, the longer your money will last.
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