A new survey confirms an old paradox in retirement planning: American workers think they’ll need more than $1 million in savings to retire comfortably, but that’s a goal most of them don’t expect to meet.
Financial companies often survey American workers about the “magic figure” of saving for a comfortable retirement. The latest survey comes from global asset management company Schroders.
Retirement savers surveyed this spring told Schroders they think they’ll need $1.2 million to retire comfortably.
Yet half of those surveyed said they expect to retire with less than $500,000 in savings. A quarter said they expected to save less than $250,000. Only 30% expect to reach the $1 million goal.
“Participants are aiming for a million dollars, but many are on a half-million-dollar savings path,” said Deb Boyden, head of US defined contributions at Schroders.
The survey, released July 15, reached 1,500 investors, including 615 workplace retirement savers.
Is a comfortable retirement out of reach?
The report paints a bleak picture of retirement savings. This may seem counterintuitive, at a time when the stock market is at record highs.
But Americans are also facing years of cumulative inflation. A retiree in 2026 can expect to pay more than ever before, for example, for long-term care expenses.
More than two-thirds of retirement savers surveyed by Schroders said they believed the rising costs of health care, housing, insurance and utilities “have put retirement out of reach for their generation,” the report said.
More than half of savers said they are unable to set aside 10% of their salary for retirement due to competing financial priorities.
One-third of savers said their credit card debt exceeds their retirement savings.
More than one-quarter said they borrowed from their retirement plans to pay off debt, cover financial emergencies or keep up with rising costs of living.
“The data is telling us that retirement savings aren’t the only financial priority getting attention,” Boyden said.
Retirement savers are hoarding cash
Retirement savers also reported holding a larger portion of their savings in cash, a choice that indicates distrust in financial markets. Financial planners routinely advise most retirement savers to focus on two asset classes, stocks and bonds.
Here’s how savers surveyed by Schroders allocate their investments:
- Stock, 27%
- cash, 26%
- bonds, 17%
- Target-Date Fund, 12%
- Private equity or credit, 12%
- Others, 6%
That analysis shows that savers surveyed have about 56% of their money in stocks and bonds.
Schroders asked why those savers kept so much of their nest eggs in cash. Here are the top three reactions:
- “I’m afraid of losing a lot of money if the stock market goes down,” 53%
- To diversify their investments, 44%
- Waiting for the right time to buy stocks, 33%
Whatever the reasoning, financial advisors generally caution investors against keeping too much of their investments in cash, because a mix of stocks and bonds historically produces better returns.
“There is a significant opportunity cost to waiting on the sidelines and sitting in cash,” Boyden said.
How important is the ‘magic number’ of retirement?
The “magic number” is one of the hottest topics in retirement savings in an era when American workers are tasked with saving for their retirement.
A similar survey published this year by Northwestern Mutual put the magic number at $1.46 million.
However, retirement experts caution that any arbitrary savings goal is of limited use, being more of a guide than a hard target.
“The message is less about that magic number and more about planning and working toward those savings goals,” Boyden said.
Not many Americans retire with $1.2 million or $1.46 million in savings. According to the 2022 federal Survey of Consumer Finances, the typical family aged 65-74 has about $200,000 in retirement accounts.
Few, if any, retirement planners would suggest that every retiree needs $1 million to get by. Most Americans retire around that level of savings, too. Many people retire comfortably on Social Security income alone.
A more attainable retirement planning goal suggests that you aim to save 10 times your annual income by age 67. For the typical American family, based on a median household income of $83,730 in 2024, this would amount to just over $800,000 in savings.