Nest eggs shrink as inflation balloons

by Renata

As inflation increases the price of goods and services across the U.S., it also is demanding more from people’s savings accounts. The demand is so great that the amount needed to retire comfortably reached an all-time high.

According to Northwestern Mutual’s 2024 Planning & Progress Study, Americans will likely need upwards of $1.46 million stowed away to retire comfortably. This is a 15% increase from what was expected in 2023 and a 53% increase from just five years ago. Unfortunately, the amount of savings doesn’t seem to be keeping pace.

Northwestern Mutual’s data shows that, as of 2024, the average American has only saved $88,400 for retirement.

This is a modest decrease from 2023 by $900, but it is more than $10,000 less than the average amount saved in 2021.
America will also be subject to its largest surge of citizens hitting the traditional retirement age.

In 2024, over 4 million Americans are expected to turn 65. This amounts to an average of 11,000 Americans per day – and that pace could keep until 2027. But of the greatest amount of potential retirees, just under half feel financially prepared. With so many factors adding to retirement nowadays, only 49% of Boomers and 48% of Gen X believe that they will have the right amount of money to retire.

But despite the downcast nature of this data, it does seem to be having a positive effect. Younger generations are beginning to save sooner and hoping to retire earlier. Gen Z individuals begin saving for retirement at around age 22 on average. That’s 15 years sooner than Boomers – whose average age for retirement saving begins at 37 – and nine years before the average American.

This expedited savings push was acknowledged Aditi Javeri Gokhale, chief strategy officer, president of retail investments, and head of institutional investments at Northwestern Mutual, who said: “Young people today recognize the value of retirement planning and building wealth early on in life and are getting a significant head start over their parents and grandparents.”

The ultimate hope for Gen Z is that they will be able to retire sooner because they began to save earlier.