Most Americans are feeling more confident about their retirement prospects, except for one major concern: outliving their savings.
A new survey published by BlackRock shows that 68% of Americans feel like they are on track for retirement, a sharp increase from last year's 56%. Despite that, more than 60% of respondents said they are worried about outliving their nest egg in their golden years.
It marked the third year straight that a majority of respondents expressed fear about their money running out in retirement.
THE 'MAGIC NUMBER' TO RETIRE COMFORTABLY HITS NEW ALL-TIME HIGH
The problem is prevalent across generations. About 69% of Gen Z, which includes those born between 1997 and 2012, said they were worried about their savings running out. That compares to 56% of millennials and 63% of Gen X.
"Confidence in retirement has varied for the last nine years; and while we have seen increases when markets are up, when we look at sentiment broken out by gender, generation and access to a retirement savings plan, it tells a complicated story," said Rob Crothers, head of U.S. retirement at BlackRock.
Vanguard data shows that the average balance in an employer-sponsored retirement contribution plan rose to $134,128 in 2023, a 19% increase from the previous year. The median account balance was $35,286, a 29% increase from 2022.
INFLATION IS UP 20% SINCE BIDEN TOOK OFFICE
The sizable increase in account balances stems from an increase in equity and bond markets as well as ongoing contributions over the year, Vanguard said.
Despite the jump, account balances are still nowhere near the $1.46 million figure that Americans believe they need to retire comfortably.
Consumers are grappling with a number of financial headwinds, including steep interest rates and ongoing inflation that has made the cost of just about everything from rent to gasoline to groceries more expensive. The burden is disproportionately borne by low-income Americans, whose already stretched paychecks are heavily affected by price fluctuations.
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While inflation has fallen considerably from a peak of 9.1% notched during June 2022, it remains above the Federal Reserve's 2% goal. And when compared with January 2021, before the inflation crisis began, prices are up 20%.
The uncertain economic landscape has many Americans reconsidering whether retirement is a realistic goal. More than one-quarter of all non-retired investors said they would likely be forced to return to the workforce at some point due to inadequate savings if they were to retire within the next 12 months, and 19% doubt they will ever save up enough money to retire, according to separate survey data from Nationwide.
"Americans believe they will need over $1 million to retire comfortably, a figure that could be discouraging for even the most committed retirement savers," said Rona Guymon, senior vice president of Nationwide annuity distribution.
