The typical American estimates that they will need to save a median of $300,000 to retire comfortably. But most retirement investors say their nest egg is currently comprised of a median of just $20,000, or about 6.7 percent of their retirement goal, according to a recent Wells Fargo survey of 1,756 middle class households earning less than $100,000 annually.
Workers in their 50s set the lowest retirement goal for themselves of any age group in the survey: $200,000. They currently have a median of $29,000 saved, or about 14.5 percent of their goal. The typical 50-something expects their retirement to last nearly two decades (19 years). The amount of savings these investors currently have will provide them with a retirement income of about $190 a month over 20 years, assuming a 5 percent rate of return annually.
Individuals in their 60s have a median retirement goal of $300,000, but say they currently have just 10 percent or $30,000 tucked away for retirement. Employees in their 30s set the highest retirement savings goal of any age group: $400,000. They currently have 5 percent of that or $20,000 saved.
“Too many Americans have their heads in the sand in the face of obvious savings deficits,” says Laurie Nordquist, director of Wells Fargo Institutional Retirement and Trust. “People are not even close to where they need to be in total savings. Barring a miracle, a winning lottery ticket, or a big inheritance, they’re going to be forced to dramatically cut back their lifestyles after retirement.”
The survey respondents were also asked to estimate how much they would spend on health care throughout retirement. The median anticipated out-of-pocket health care spending was $32,300, which is significantly more than the typical worker has saved for retirement. All of the age groups queried say health care is likely to cost more than they currently have saved except for 60-somethings, who have saved barely enough to cover their expected health care costs.
Unsurprisingly, most of the employees surveyed (72 percent) plan to continue to work in retirement, either because they need the money (39 percent) or because they want to (33 percent), the survey found. Most middle class Americans (63 percent) also say they are planning to rely on Social Security as a major source of retirement income.