Top Economist Debunks Myth You Need $1.46 Million To Retire – Argues You Can Retire Comfortably With $100,000 Or Less

A recent survey from Northwestern Mutual revealed that Americans believe they need about $1.46 million to retire comfortably. This figure has jumped 15% in just a year and represents a staggering 53% increase since 2020. It's clear that many people feel pressure to save an astronomical amount for retirement – but is this really what you need?

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Andrew Biggs, a senior fellow at the American Enterprise Institute, is challenging the status quo with a bold claim: you might be able to retire with as little as $50,000 to $100,000 in total savings. That's a far cry from the million-dollar benchmark many financial experts advocate and the amount people think they need. 

In his Wall Street Journal opinion piece, "You Don't Need to be a Millionaire to Retire," Biggs explains the average American has only saved around $88,400 for retirement. He argues that despite what surveys say, hard data on retirees show it takes far lower levels of savings to be financially secure in retirement. 

Contrary to widespread concerns about retirees struggling financially, recent data paints a more optimistic picture. According to Biggs’ analysis of the Federal Reserve’s Survey of Household Economics and Decision-Making, most older Americans appear to be managing well in retirement.

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The survey asked U.S. households about their financial situation and revealed some encouraging trends for those aged 65 to 74. Between 2019 and 2022, 86% of respondents in this age group reported “doing OK” or “living comfortably.” Specifically, 49% said they were “living comfortably,” while 37% reported “doing OK.”

Only a small fraction of retirees in this age range indicated financial distress. About 12% stated they were “just getting by,” and a mere 3% reported “finding it difficult to get by.” This suggests that the reality of retirement for many Americans may be more positive than often portrayed in public discourse.

Biggs also points out a particularly useful question: "Approximately how much do you currently have saved for retirement?" The categories ranged from "less than $10,000" to "more than $1 million."

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Only 19% of retirees reported having less than $10,000 in savings. This figure challenges Sen. Bernie Sanders's claim that "almost 45% of older Americans between the ages of 55 and 64 have no savings at all and no idea how they will be able to retire with any shred of dignity or respect." Among those finding it difficult to get by, nearly 75% had less than $10,000 in savings. Yet, a slight majority of retirees in this category (52%) reported being either "doing OK" or "living comfortably."

For seniors with more than $10,000 in retirement savings, fewer than 1% said they were struggling financially, while 93% indicated they were "doing OK" or "living comfortably." Among those with $50,000 to $99,999 in savings – a figure much lower than many financial advisors suggest – only 3% reported difficulty getting by, 11% were just getting by, and 86% were either "doing OK" or "living comfortably."

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Biggs’ analysis reveals that many retirees report financial comfort with savings between $50,000 and $100,000. This suggests that not having a million-dollar nest egg isn’t necessarily a cause for panic or a reason to believe retirement is impossible. Biggs’ opinions are based on a survey of current retirees’ actual experiences, which often differ significantly from pre-retirees' expectations or fears about future needs.

In his WSJ piece, Biggs emphatically states, “It’s impossible to find any evidence that seniors need even a fraction of $1.46 million in savings to be financially secure.” Whether you need $50,000, ten times your annual earnings, or even millions, it's a good idea to consult a financial advisor. They can help create a realistic savings goal for you and your needs. 

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