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Here's how much money Americans think they need for retirement

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MoneyWatch: Tips for managing your savings 03:29

Americans have big goals for retirement, with a new survey finding they believe they'll need savings of $1.25 million to ensure comfortable living in their golden years. The troubling reality, however, is that most people find themselves miles away from that target, with the typical U.S. retirement account holding less than $87,000. 

To be sure, the so-called retirement gap — the shortfall between the amount of money people will need in their later years and what they actually have squirreled away — is a long-standing problem. But the gulf between Americans' long-term financial aspirations and the grimmer reality is growing even wider, with many people today struggling to pay for basics like food and shelter, let alone plan for retirement. 

The latest distress signal is revealed in a new Northwestern Mutual study, an annual survey of more than 2,000 adults on their attitudes and behaviors around money and financial planning. The analysis found that the typical American now anticipates they'll need $1.25 million for a comfortable retirement  — a 20% jump from 2021. At the same time, the average retirement account has lost 11% in value over that time, declining to $86,869 this year.

"People are feeling a financial crunch at the moment. It's a harder environment to save in, and many have seen losses in their investment and 401k portfolios," said Tim Harrison, founder and CEO of Harrison Financial Services, a Northwestern Mutual Private Client Group, in an email to CBS MoneyWatch.

Inflation and other factors "are escalating what people estimate they'll need to retire comfortably. So we're seeing people push out the age at which they expect to retire, and more saying they're not sure they'll be ready when the time comes," he added.

The findings come as other research emerges about America's lack of retirement readiness. Only a quarter of current retirees are generating enough income to replace $7 out of every $10 in pre-retirement income — the usual rule of thumb for a comfortable retirement, according to a study released earlier this month by Goldman Sachs. 

About half of retirees are living on less than half their pre-retirement income, with those older Americans "particularly vulnerable" to inflation and other economic trends, Goldman said.

"We have a retirement problem in the U.S.," said Greg Calnon, head of multi-asset solutions at Goldman Sachs Asset Management, in a conference call about their findings. The U.S. retirement system has "shifted responsibility from the employer to the employee" with the switch from pensions to 401(k)s.

How to save for a secure retirement 07:28

Workers are dealing with "very high market volatility — and longer life expectancies," he added. "That is a challenging mix for individuals to navigate."

For retirees, the general rule is to withdraw no more than 4% of their 401(k) and other savings annually, which means a $1.25 million retirement account would provide $50,000 in annual income. An $87,000 retirement account would provide about $3,500 annually. 

Grand illusion

About 4 in 10 Americans say they don't think they'll be ready to retire, Northwestern Mutual found. As a result, Americans now say they plan to retire when they are 64, up from 62.6 years old last year, the study found. 

Yet retirees' actual experience suggests many Americans will have little choice about about when they retire. Goldman's survey of currently retired people found that 56% left the workforce before they had planned to do so. And about half said they retired for reasons beyond their control, such as health problems, losing their job or needing to care for family members. Only 7% said they retired because they had enough money socked away, the study found. 

Younger workers also need to save for retirement while coping with raising children, caring for older parents and dealing with the rising cost of living, Goldman's experts said. Such a "vortex of competing financial needs can throw retirement readiness off track," Mike Moran, senior pension strategist at Goldman Sachs Asset Management. "This is the new reality for retirement savers."

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