According to two new reports, Americans think their savings accounts need to be in the seven figures before they retire. Studies by Northwestern Mutual and Charles Schwab both revealed that Americans want plenty of cash stashed away for their golden years, and for many people, that means it’s time to get serious about saving.
The Northwestern Mutual report surveyed more than 2,000 adults and found that the key number to retire comfortably was $1.2 million. That number is up almost 20 percent compared to last year. The Charles Schwab survey found that number was significantly higher, at $1.7 million. Unsurprisingly, both studies showed that inflation is holding people back from reaching their retirement savings goals. A whopping 79 percent of adults in the Schwab survey said their savings was impacted by inflation. Respondents in the Northwestern report cited inflation as a hindrance to retirement savings as well.
With such high numbers for retirement on the table, make sure you’re doing what you can to save — and the earlier you start saving, the better. You’ll want to invest to make your money grow as fast as possible. If you start saving at 25 and your goal is to have $1.7 million by the time you reach 65, you should invest about $650 per month (assuming a seven percent return). However, if you wait to start saving until you hit 30, you need to invest about $950 per month to hit that goal.
Clearly, one of the keys to saving for your golden years is to start early. You should also increase your savings rate as you earn more in your career. However, what’s most important is that you save something. It doesn’t have to be a huge amount. Every little bit will get you closer to that $1.2 million or $1.7 million mark.