Affluent Americans Say They Need $2.6 Million to Retire, But Most Are Far Short
New HSBC research found that affluent Americans now estimate needing $2.6 million for a comfortable retirement, a 26 percent jump from a year ago, but on average have saved only 52 percent of that goal. The Transamerica Institute's CEO called the situation a 'perfect storm' of inflation, job insecurity, and rising healthcare costs.
Affluent Americans now say they need $2.6 million to retire comfortably, a 26 percent increase from just a year ago, but on average have saved only 52 percent of that goal, according to new HSBC research conducted by Ipsos.
The survey covered investors with at least $100,000 in investable assets. No generation is fully on track. Baby boomers, closest to retirement, have reached 74 percent of their target. Millennials lag at just 42 percent. Gen X has saved 55 percent of its goal, and Gen Z sits at 45 percent.
"It is a perfect storm," said Catherine Collinson, CEO and president of the nonprofit Transamerica Institute, in a report released last week. Persistent inflation, job insecurity, competing financial priorities, and uncertainty about Social Security are all making it harder to save.
Healthcare costs are adding to the pressure. A 65-year-old retiring this year can expect to spend an average of $185,500 on healthcare over the course of retirement, a 7.5 percent year-over-year increase, according to a July Fidelity report.
More than 4.1 million Americans turn 65 each year through 2027. Many will lean on a Social Security trust fund projected to run out of reserves by 2032.
BlackRock CEO Larry Fink has warned for years about a coming retirement crisis. Americans surveyed by BlackRock said they would need about $2.1 million to retire comfortably, yet 62 percent had less than $150,000 saved.
Retirement is also no longer the only savings goal. Seven in 10 affluent respondents said they are planning for a life that does not follow a straight path. Funding retirement is the most common goal at 43 percent, but personal reinvention, such as switching careers or launching a business, comes in at 39 percent. Supporting both children and aging parents ranks third at 37 percent.
The U.S. retirement system earned a C+ in this year's Marsh CFA Institute Global Pension Index, ranking 33rd out of 55 retirement income systems worldwide.
