### Summary
📉 Americans could run out of savings as early as this quarter, according to a Fed study. Excess savings are likely to be depleted during the third quarter of 2023.
### Facts
- 💸 As of June, US households held less than $190 billion of aggregate excess savings.
- 💰 Excess savings refer to the difference between actual savings and the pre-recession trend.
- 🔎 San Francisco Fed researchers Hamza Abdelrahman and Luiz Oliveira estimate that these excess savings will be exhausted by the end of the third quarter of 2023.
- 💳 Americans are using their credit cards more, accumulating nearly $1 trillion of debt.
- 📉 The downbeat forecast raises concerns about the US economy as consumer spending is crucial for growth.
### Summary
🇺🇸 61% of Americans are living paycheck to paycheck, according to a new report.
### Facts
- 📊 About three-quarters of consumers earning under $50,000 and 65% of those making $50,000 to $100,000 were living paycheck to paycheck in June.
- 💰 45% of those making over $100,000 reported a paycheck-to-paycheck existence.
- 💸 Inflation, rising interest rates, and inadequate savings are cited as factors contributing to financial stress.
- 😰 52% of respondents reported feeling more financially stressed than before the COVID-19 pandemic.
Summary
Gen Z and millennials need between $3 million and $5 million in retirement savings due to inflation.
Facts
- Gen Z and millennials need $3 million to $5 million for a comfortable retirement due to inflation.
- More than 7 in 10 investors believe that $3 million to $5 million is the ideal retirement savings target.
- The rise in inflation has led to a three- to five-fold increase in the recommended retirement savings target.
- Managing towards an unknown future, including uncertain prices and lifespan, adds to retirement anxiety.
- Bloomberg customers, who have high incomes and careers in finance, were surveyed for the study.
- The US government debt will increase by $5.2 billion per day, adding to the need for increased savings for retirement.
Gen Z and millennials need to save between $3 million and $5 million due to inflation, which has led to a three- to five-fold increase in the recommended retirement savings target, according to a Bloomberg study.
A recent survey conducted by Allianz reveals that 61% of Americans are more afraid of depleting their savings during retirement than dying, highlighting the concern over outliving one's financial means in old age.
The average retirement balances in Americans' IRAs, 401(k)s, and 403(b)s have reached $113,800, $112,400, and $102,400, respectively, signaling an increase for the third quarter in a row, providing motivation for individuals to take actions like automating retirement savings and taking advantage of employer matches or alternative retirement-saving vehicles.
About 75% of Americans aged 50 and older worry that Social Security will run out of funding in their lifetimes, compared to 66% in 2014, according to a survey by Nationwide Retirement Institute, as concerns grow with the depletion dates of the program's funds approaching.
Only 35% of Americans know the average lifespan of retirees, and just 12% understand key aspects of longevity, highlighting the need for better retirement planning based on life expectancy.
A couple in their 30s who both have high-paying jobs, a rental property, and are saving approximately $53,000 a year toward retirement can expect to have around $1.8 million respectively by the age of 55, suggesting they are saving enough and can continue their current lifestyle.
Many young investors have high expectations of retiring by 60, but the reality is that most are not on track to do so, with the median 401(k) balance for Americans in their 30s being $18,400 and $5,400 for those in their 20s, according to data from Fidelity.
Millions of Americans may have to prioritize their student loan payments over their retirement savings, as the resumption of student debt repayments poses a challenge for workers already struggling to save for retirement due to inflation and market volatility.
Starting no later than 25 years old, Americans should save $100 a week to generate savings of over $1.1 million by age 65, according to a report from the Milken Institute.
A CNBC survey found that 74% of Americans are feeling financially stressed, with inflation, rising interest rates, and a lack of savings being the top stressors, making it difficult for many workers to contribute to their retirement plans.
About 3 in 4 Americans are at least somewhat stressed about their finances, with 52% saying they would require at least $100,000 a year to be financially comfortable, according to a CNBC survey, although younger people are more likely to feel comfortable on less than six figures.
The Senior Citizens League estimates a 3.2% Social Security cost-of-living adjustment in 2024, potentially raising the average monthly retirement benefit by about $57.30, but the official calculation will be revealed in October and may be influenced by factors such as inflation and Medicare Part B premiums.
Almost half of Americans believe that achieving retirement security is impossible, with inflation being the top concern, according to a survey by Natixis Investment Managers, although the US has improved its overall score for retirement security.
Approximately 75% of American workers earning up to $50,000 live paycheck to paycheck, while credit card debt has exceeded $1 trillion, making it difficult for those with debt to save; Gen Z saves more money than older generations due to their experience of the Great Recession, lack of trust in Social Security, and inclination to invest in cryptocurrency.
As the average population ages, a majority of older Americans are reaching retirement with limited options for affordable long-term care, as costs continue to rise and long-term care insurance remains uncommon.
About 45% of single retirees and 21% of retired married couples rely on Social Security for more than 90% of their income, making it essential to prioritize covering essential living expenses such as housing, utilities, groceries, and healthcare.
Approximately 60% of Americans are living paycheck to paycheck, facing financial challenges due to high inflation, higher interest rates, and stagnant wage growth.
A recent report suggests that many Gen Xers in the US are not saving enough for retirement, with only 14% having a defined benefit pension plan and the median retirement savings for Gen X households being just $40,000. Additionally, there are stark racial and ethnic differences in savings accumulation, with Black and Hispanic workers having the lowest savings.
Almost half of U.S. households headed by someone 55 or older have no retirement savings, but there are three key steps individuals can take to catch up, including cutting expenses, maximizing contributions to retirement accounts, and considering alternative sources of retirement income such as home equity or insurance policies.
The average American believes they need a salary of $233,000 per year and $1.3 million in retirement savings to feel financially secure, despite the fact that the average yearly income for a full-time worker is just over $75,000.
Only 17% of those who retire early actually do so voluntarily after saving enough money, with the rest being forced out, leaving due to ill health, or needing to continue working for financial reasons, highlighting the challenges of achieving the financial independence and early retirement advocated by the FIRE movement.
Millennials, despite facing challenges such as student debt and the absence of traditional pensions, are actually better positioned for retirement savings compared to baby boomers, according to a study by Vanguard.
The Social Security Administration is expected to announce a smaller cost-of-living adjustment for retired Americans in 2024, potentially at 3.2%, due to cooling inflation, which is a decline from the 8.7% increase seen in 2023 but still higher than the average increase over the past two decades.
Americans have $1.2 trillion more in excess household savings than previously estimated, which could be good news for the economy as it tries to address inflation and could delay the depletion of savings until next year, according to revised government data.
Social Security recipients will see a smaller annual cost-of-living adjustment of 3.2% for 2024 due to moderated inflation, leading to monthly payments rising by $59 to an average of $1,907, which remains well above the average adjustment over the past two decades.
The Social Security Administration has announced that the cost-of-living adjustment for 2024 will be 3.2%, a smaller increase than this year's 8.7%, potentially impacting seniors and beneficiaries who are already struggling to keep up with rising expenses due to inflation.
The Social Security Administration announced a 3.2% increase in benefits for retirees in 2024, costing the government billions of dollars, in order to offset inflation and help beneficiaries cover expenses.
Despite making more than $100,000, many Americans still struggle with financial hardships, highlighting the prevalence of living paycheck to paycheck.
The recommended percentage of salary to save for retirement is 15%, although the specific amount will vary for each person, with experts suggesting a range between 10% and 20%, and advising to save more as you age and your income increases over time.
A survey found that 23% of Australians do not have enough saved for retirement, potentially leaving them financially unsupported in their senior years.
Social Security recipients will receive a smaller cost-of-living adjustment in 2024, but the increase of 3.2% will help retirees keep up with rising prices.
The retirement crisis in America could lead to a $1.3 trillion cost for the government by 2040 due to a shortfall in retirement funding driven by demographics, with an expected 43% increase in households aged 65 or older that have less than $75,000 in annual income; the US also ranks 22nd out of 47 countries in terms of its retirement income system.
