Americans believe they need $1.2 million in savings to retire comfortably, according to a new study from global investment management firm Schroders.
However, the survey found that only 30% of workplace retirement plan participants surveyed said they thought they would reach $1 million in savings by the time they retired.
The survey of 1,500 investors conducted between March and April found that more than half (51%) expect to save less than $500,000 for retirement, with 24% saying they will save less than $250,000.
The researchers found that retirement savers cited rising expenses, credit card debt and competing expenses as reasons for lack of funds. It’s notable that 33% have more credit card debt than they have saved for retirement, according to the survey. Meanwhile, 55% said competing expenses prevent them from saving 10% of their paychecks for retirement, and 69% said rising costs are putting retirement funds out of reach for their generation.
“Many investors just have a hard time converting good intentions into long-term retirement savings,” said Deb Boyden, head of U.S. defined contribution at Schroders.
As individuals face tough trade-offs, retirement savings may be among the first to be deprioritized, Schroders research has found. The results show that some respondents are choosing to reduce plan contributions or borrow from their 401(k) to achieve other financial goals, such as reducing debt, paying for emergency expenses, or dealing with rising costs of living.
What to prioritize instead of a “magic” retirement number
The idea of a “magic” retirement savings amount that will give you the ideal retirement lifestyle is not new.
Earlier this year, Northwestern Mutual found that the threshold Americans need to retire peacefully in 2026 is $1.46 million.
To be sure, the amount of retirement savings people think they need can vary depending on the cost of living. Northwestern Mutual’s estimate is up $200,000 from last year. Schroders is down from $1.28 million. Moreover, they may just be guesses.
“It’s hard to save for a future that feels abstract when the present feels urgent,” says Douglas Bonepers, a certified financial planner and president and founder of Born Fied Wealth in New York. Boneparth is also a member of the CNBC Financial Advisor Council.
Rising costs, credit card debt, and competing expenses are no excuses. Those are realities, Bonepers said.
If you’re feeling like you’re falling behind on your retirement savings, it might help to stop chasing numbers and start building habits, he says.
A goal like $1.2 million may seem far away when you have a balance of $12,000, but if you save consistently, work to reduce high-interest debt, and invest early, “you can accomplish more than you think,” Bonepers says.
Whether the $1 million retirement savings benchmark is right for you depends on where you live, your lifestyle, and when you plan to retire.
“Sometimes you need more, and sometimes you need a lot less,” Vonepers says. “it depends.”
retirement savings
Investing your money properly can help you reach your retirement savings goals.
But a Schroders study found that 24% of retirement plan members don’t know how their retirement savings are invested. Among those in the know, a significant portion of the allocation for all types of retirement savings accounts was allocated to cash, at 26%, about the same as stocks at 27%.
“For participants with a long-term horizon, excess cash can lead to meaningful opportunity costs,” Boyden said.
These cash holdings are primarily for safety reasons, cited by 53% of survey respondents. Desire to diversify investments, 44%. 33% are waiting for the right time to invest.
To determine whether you are on track for retirement, consult a trusted financial advisor or consult educational resources provided through your workplace retirement plan.
“Most people who feel stuck have never sat down with someone to make a plan,” Vonepers says. “That conversation alone tends to change things.”
