US workers say they need US$1.8 million for retirement

WORKERS are finding it harder to save for retirement, even as the amount they need keeps rising.

The average savings target in the US is now US$1.8 million, according to a nationwide Charles Schwab survey released on Wednesday (Aug 2). That’s up from US$1.7 million a year ago.

Nearly 80 per cent of the 1,000 401(k) plan participants surveyed said inflation and market volatility were getting into the way of saving more this year, and 36 per cent of those respondents said they’d retire later than planned as a result.

The year-over-year overall retirement target in the Schwab survey isn’t a huge change, at about 6 per cent, but the percentage of workers who think it’s “very likely” they’ll reach that goal fell to 37 per cent from 47 per cent a year ago, and from 53 per cent in 2021.

Americans are facing a massive retirement shortfall, and potential cuts to Social Security benefits could make matters worse. A recent report from Vanguard found that the average balance for Vanguard defined contribution plan participants was US$112,572 at the end of last year, and the median was US$27,376. At Fidelity Investments, the average 401(k) balance was US$108,200 in the first quarter of 2023. BLOOMBERG