Northwestern Mutual study finds Americans now believe they’ll need $1.25 million for a comfortable retirement

This figure represents a jump of 20% compared to last year

The anticipated retirement age is increased from 62.6 to 64

MILWAUKEE, October 25, 2022 /PRNewswire/ — The latest findings from Northwestern Mutual’s 2022 Planning and Progress Study reveal that American adults aged 18 and older anticipate they will need $1.25 million to retire comfortably, a 20% increase since 2021. At the same time, average American retirement savings have fallen 11%, from $98,800 last year at $86,869 now – as their expected retirement age has increased – now 64, up from 62.6 last year.

“It is a time of uncertainty for many people, mainly due to rising inflation and market volatility,” said Christian Mitchell, executive vice president and chief client officer at Northwestern Mutual. “We have also seen an increase in spending year over year, not only due to inflation, but also because people have regained a sense of normalcy in their lives after the first days of the pandemic. . These factors are causing many people to recalibrate their thinking about how much they will need to retire and how long it will take to get there.”

Four in ten people don’t think they’ll be ready to retire
The study finds low levels of confidence among Americans about their retirement preparedness, and they don’t have much faith in Social Security as a safety net. More than four in ten (43%) say they don’t expect to be financially ready for retirement when the time comes. And 45% say they can imagine a time when Social Security no longer existed.

Meanwhile, one-third (33%) of Americans expect to live to 100, with an equal third (33%) predicting there’s a greater than 50% chance they’ll outlive their savings. At the same time, more than one in three (36%) say they have taken no proactive action to address this concern..

Work longer
Americans on average plan to work until age 64, up from 62.6 last year. Interestingly, the study found that working with an advisor and/or being a disciplined planner can cut a few years out of work – these two subgroups report expected retirement ages of 61 and 62 respectively.

“It’s one of those questions that so many people worry about – how long should I expect to work in order to save enough for retirement?” Mitchell said. “It’s really hard to answer because there are all sorts of considerations to take into account. But too many people tackle it in a bubble. With greater clarity, you can make a more confident call and get professional advice. can provide that clarity.”

Asked about the impact of the pandemic on people’s retirement timelines, a quarter (25%) said they planned to retire later than they had planned, and 15% said that they planned to retire early. Explore the reasons why:

Finally, the study also revealed some interesting data on what Americans value in their working lives, finding that most adults (60%) prioritize personal growth over salary and earning potential (40%) in their career.

“This is a truly fascinating finding and one that advisors should consider when working with their clients,” Mitchell said. “What people prioritize goes far beyond their bottom line. The best advisors understand their clients’ values ​​and motivations, not just their financial situation.”

About the Northwestern Mutual 2022 Planning and Progress Study
The 2022 planning and progress study was conducted by The Harris Poll on behalf of Northwestern Mutual and included 2,381 U.S. adults ages 18 or older who participated in an online survey between February 8 – 17, 2022. Results were weighted by census targets for education, age, gender, race/ethnicity, region and household income. Propensity score weighting was also used to adjust respondents’ propensity to be online. No estimate of the theoretical sampling error can be calculated; a complete methodology is available.

About Northwestern Mutual
North West Mutual helping individuals and businesses achieve financial security for over 165 years. Through a holistic planning approach, Northwestern Mutual combines the expertise of its finance professionals with a personalized digital experience and industry-leading products to help its customers plan what matters most. With over $561 billion in the combined company and customer assets, $34 billion in revenue, and $2.1 trillion with in-force life insurance protection, Northwestern Mutual provides financial security to nearly five million people with life, disability and long-term care insurance, annuities, and brokerage and advice. Northwestern Mutual ranked 97th on the 2022 FORTUNE 500 and was recognized by FORTUNE® as one of the “World’s Most Admired” life insurance companies in 2022.

Northwestern Mutual is the trading name of The Northwestern Mutual Life Insurance Company (NM), Milwaukee, Wis. (life and disability insurance, annuities and life insurance with long-term care benefits) and its subsidiaries. Subsidiaries include Northwestern Mutual Investment Services, LLC (NMIS) (Investment Brokerage Services), Broker, Registered Investment Adviser, Member FINRA and SIPC; Northwestern Mutual Wealth Management Company® (NMWMC) (investment advisory and services), federal savings bank; and Northwestern Long Term Care Insurance Company (NLTC) (long term care insurance). Not all representatives of Northwestern Mutual are advisers. Only representatives whose title includes the term “advisor” or who otherwise disclose their status as an adviser to NMWMC are accredited as representatives of NMWMC to provide investment advice services.

SOURCE North West Mutual