Even rich people aren’t meeting their retirement goals, a study by British bank HSBC shows.
They think they need $2.6 million to retire comfortably, according to HSBC’s online survey of 9,993 affluent and high-net-worth individual investors aged between 21 and 69, with minimum investable assets of $100,000 and $2 million, respectively. That’s up 26% from just a year ago and about double what other surveys show everyday Americans think they need. Retirement savers surveyed this spring told Schroders they think they will need $1.2 million to retire in comfort.
But like everyone else, affluent people are falling short of what they think they need for a comfortable retirement. They’ve only saved on average 52% of that goal, HSBC said. Baby boomers have saved 74% of their retirement goal, Gen X has saved 55%, while Gen Z at 45% is slightly ahead of Millennials’ 42%.
“A comfortable retirement is becoming more expensive, even for those with substantial wealth,” said Racquel Oden, HSBC’s U.S. head of international wealth and premier banking.
Why Are Forecasts Soaring for the Cost of a Comfortable Retirement?
“Inflation is part of the story, but retirement itself has changed,” a HSBC spokesperson said. Seven of 10 are planning to fund more than just retirement.
Though retirement (43%) remains the top goal, affluent Americans also are saving for personal or professional reinvention (39%) as they age. That can include switching careers, starting a new business, taking a planned career break or funding a new skill, HSBC said. Supporting both children and aging parents comes in third (37%) as a priority.
Longevity also plays a part, with nearly six of 10 saying it’s altered their plans. For example, 31% of respondents said they’re saving more for their future costs, such as long-term health care, even if affects how much they leave to heirs. Others are enjoying their money now, spending it on lifestyle needs, health and well-being (23%), and experiences, such as travel and passion projects (22%), HSBC said.
How Can Americans Close the Retirement Savings Gap?
The first step is to throw away the ‘magic number,’ or amount surveys say may make a comfortable retirement, advisers said. Instead, focus on your own goals and remain flexible.
“Closing the gap starts with letting go of a one-size-fits-all view of retirement,” a HSBC spokesperson said. “People’s lives and priorities change and their wealth plans should be designed to change with them.”
Instead, “a realistic retirement goal comes down to the life you want, where you’ll live, when you plan to retire, your health and the income you’ll have.” the spokesperson said. “Keep revisiting the plan as your life changes.”
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
Reporting by Medora Lee, USA TODAY.
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