One of the greatest aspirations of workers (or at least one of mine) is to think about the sweet arrival of retirement. We all know what we want to do when that time comes, but the most important thing is to have our finances under control so we can afford it. This is often the sticking point: being able to save enough to enjoy retirement.
According to data compiled by Clever, almost half of Americans believe that their retirement savings will not be enough. For its part, the Federal Reserve’s Triennial Survey of Consumer Finances, published in October 2023, reveals the average net worth of retirees in the United States: $1,794,600 for retirees between the ages of 65 and 74, and $1,624,100 for retirees over the age of 75. These figures are obtained by calculating the average, which is skewed by large estates.
That is why it is important to use the median for comparison. In that case, the amounts are more realistic, $409,900 and $335,600. Another factor to consider is the cost of living, in this case in the United States, which affects retirement savings. However, it is estimated that the optimal amount needed to cover 25 years of retirement is around the median net value of $364,500.
Retirement in the United States
The retirement age in the United States may be up for debate, but as of today, it stands at 67. However, even though the age is being pushed back further and further, the truth is that we all think about the arrival of that moment when our only obligation for the day is to enjoy life. Unfortunately, this is only possible if we have enough savings to live comfortably for the rest of our lives. And that is precisely the problem reported by retirees in the United States, who, as Clever reports, believe that they will outlive their retirement savings.
How much should an American save to enjoy retirement?
It is important to consider several factors. On the one hand, each state in the country has a different cost of living, which allows (or prevents) people from having the same amount of savings. If we analyze the average net value for retirement from the Federal Reserve’s Triennial Survey of Consumer Finances, published in October 2023, the figures are:
- Retirees between 65 and 74 years old: $1,794,600.
- Retirees over 75 years old: $1,624,100.
These numbers are enough to make anyone tremble, but calm down. Keep in mind that these figures include all of a person’s assets (house, property, savings). Furthermore, in these cases, it is better to use the median, as the average is skewed by large fortunes. This makes the figures somewhat more realistic, as follows:
- Retirees between 65 and 74 years old: $409,900.
- Retirees over 75: $335,600.
Tariffs, Costs, and the Retirement Savings Gap
The figures obtained using the median instead of the average are somewhat more realistic and closer to reality. Although they will not last forever (or maybe they will, only Trump knows), it is undeniable that tariffs are one of the factors responsible for the high cost of living in practically the entire country, which has a direct impact on Americans’ ability to save. In fact, estimates suggest that the amount needed to cover 25 years of retirement is $364,500 for people between the ages of 55 and 64, almost double the median net worth.
Considering these figures, the cost of living, the state you live in, and your current personal financial situation, do you think you will be able to save enough to enjoy your well-deserved retirement when the time comes, or do you think you will have to look for alternatives to save even more?