With the increase in the price of everything else, the cost of retirement has also risen. The average American believes that one needs $1.8 million at the time of retirement, as per the data released by the Schwab survey. The amount was $1.7 million last year. The survey took the raw data between 19th April to 2nd May from 1000 US 401(k) plan participants.
According to Schwab, only 37% of the participant workers think that they will achieve this target. This value was down by 10%, as compared to the last year.
Schwab said, according to USAToday.com,
“High inflation has been the biggest obstacle for savers, even though inflation eased in June to 3% from a 40-year peak of 9.1% a year ago. Sixty-two percent of workers see inflation as an obstacle to saving for a comfortable retirement, up from 45% last year.”
It is true that saving $1.8 million for an average worker in this inflation is highly unlikely. The Employee Benefit Research Institute’s wealth benefit director, Craig Copeland added –
“The current economic climate, in particular inflation, is eroding the confidence that Americans had in their retirement preparations going into the pandemic.”
As per many experts, saving $1.8 million is pretty hard for an ordinary American to save for retirement, given the current condition of the economy. Employees need to be very creative with their budget, live a life of fewer needs, and practice spending less to get to this amount at the time of retirement.
However, other experts say that it is fine if you don’t save $1.8 million. You can save lesser amounts and still live a simple life. It essentially boils down to the needs and lifestyle of the individual.
A passionate writer and an avid reader, Soumava is academically inclined and loves writing on topics requiring deep research. Having 3+ years of experience, Soumava also loves writing blogs in other domains, including digital marketing, business, technology, travel, and sports.