In many parts of the US, $1 million in retirement money won’t even last 20 years. Estimates on healthcare costs from Vanguard project that a typical 65-year-old retired couple will spend $197,000 in healthcare expenses alone during their retirement, or just about 30% of what the typical 60-something has saved.
According to a survey by Charles Schwab conducted in 2019, the average American felt that they’d need to save $1.7 million to retire comfortably. But getting to that point is harder than it sounds.
Millennials seem to be getting a good start on their savings, with Personal Capital’s typical 20-something client carrying a balance of about $34,000 in their retirement accounts. Between ages 20 and 49, account balances nearly triple for every 10-year age bracket.
According to a 2019 survey from Morning Consult and Insider, over 45% of millennials have a retirement account. Starting early is especially important when it comes to retirement, because one of the biggest factors that helps retirement savings grow is compound interest, where money saved generates interest on itself. The more years this process has to work, the more savings will grow.
While millennials are doing well with their saving, the older generations seem to have slowed down, and this might leave them with less than they thought in retirement. The typical 60-something has just over $642,000 saved, which sounds like a lot of money until you realize it might have to support you for the rest of your life.
Even for a couple who shares living expenses on two retirement accounts, the combined amount falls over $330,000 short of the amount they’d need to live on $65,000 per year.
In many parts of the US, $1 million in retirement money won’t even last 20 years. And estimates on healthcare costs from Vanguard project that a typical 65-year-old retired couple will spend $197,000 in healthcare expenses alone during their retirement, or just about 30% of what the typical 60-something has saved.
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