Do you dream about being able to retire someday? Of course, plenty of people do. And why not? The idea of spending your time doing what you enjoy is pretty appealing.
However, what that dream retirement actually entails varies greatly from person to person, a new survey by GOBankingRates found. The survey of more than 1,000 people found that Americans have different ideas about what the ideal retirement age is and how much to save for a dream retirement. And when it comes to saving for retirement, many Americans have low savings goals.
Keep reading to find out what Americans’ retirement goals are — and whether it’s possible for them to achieve a comfortable retirement.
Over a Third of Americans Are Saving Only $100,000 to $250,000 for Retirement
Dreaming about retirement can be fun. However, the survey found that plenty of Americans won’t have enough saved to afford the retirement of their dreams. GOBankingRates asked respondents how much they ideally would like to have saved for retirement by the time they retired, and 39 percent — the largest percentage in the survey — said $100,000 to $250,000. This was the lowest savings range respondents could select.
Ironically, the second most common response was “more than $2 million,” which was the highest savings range respondents could choose. However, it was a very distant second, with 13 percent of respondents choosing this answer.
Unfortunately, women are more likely than men to be aiming too low with their retirement savings goal, with 46 percent versus 32 percent saying they plan to have $100,000 to $250,000 saved. A big reason women should be saving more is because they tend to live longer than men, so their retirement savings needs to last longer.
|Retirement Savings Goals, by Gender and Age|
|$100,000-$250,000||$250,001-$400,000||$400,001-$550,000||$550,001-$700,000||$700,001-$850,000||$850,001-$1M||$1,000,001-$2M||More than $2M|
|Ages 65 and Over||47%||12%||10%||6%||4%||11%||7%||5%|
|*Percentages might not add up to 100% due to rounding.|
Also, adults closer to retirement age are more likely than younger adults to say that they ideally want to save just $100,000 to $250,000. The survey found that 52 percent of adults ages 55 to 64 are aiming to save this much compared with 10 percent of young adults ages 18 to 24. Young adults are more likely than any other age group to say that they would like to have more than $2 million saved by the time they retire.
How Much Americans Actually Need Saved for Retirement
Certainly, a $2 million nest egg would go a long way toward giving most Americans the retirement of their dreams — as long as they don’t encounter serious health issues or other financial hurdles that could hurt retirement savings.
But a retirement savings of $100,000 or $250,000 won’t go nearly as far as people might think. Another GOBankingRates’ study found that retirees in all states will need more than $1 million saved to cover the cost of living.
|How Much You Need Saved for Retirement by State|
|State||Annual Expenditures||How Much You Need Saved for Retirement|
|Source: GOBankingRates’ “Here’s Exactly How Much You Need Saved for Retirement in Your State” study|
To determine the ideal retirement savings in every state, the study evaluated the cost of living in every state (housing, utilities, food, healthcare, etc.) and assumed that retirees would use 4 percent of their savings each year to pay for these living expenses.
Depending on where you live, you might need more (or less) saved for retirement. In the more expensive states where cost of living is high — Massachusetts, Oregon, Maryland, Alaska, New York, California and Hawaii, for example — you’ll need anywhere between $1.6 million to $2.3 million saved for retirement. But in states like Mississippi and Oklahoma, which both have a much lower cost of living, you’ll need slightly more than $1 million saved for retirement.
Over 40% Dream Of Eliminating Mortgage and Credit Card Debt Before Retirement
Although the survey found that many Americans likely aren’t saving enough for their dream retirement, they do want to eliminate big expenses that could be a drain on their savings. The survey found that the most common expense Americans want to eliminate before retiring is mortgage debt, with 46 percent choosing this option.
The second most common debt Americans want to tackle before retiring is credit card debt. However, it’s the most common expense women want to get rid of before retirement. Another GOBankingRates’ survey found that women are more likely to have more credit card debt than money in savings, which might explain why they’re more interested in paying it off.
|Out of the following expenses, which do you dream of completely eliminating before you enter retirement? Select all that apply:|
|Mortgage Debt||Credit Card Debt||Healthcare/Medical Expenses||Student Loan Debt||Family or Children Expenses||Transportation/Car Expenses|
|Response Rate (%)||46.%||42%||32%||27%||35%||35%|
Student loan debt is actually the least common expense respondents said they want to eliminate before retirement, with 27 percent overall choosing this answer (respondents could choose more than one answer). However, young adults are much more likely than other generations to name student loan debt as the expense they want to completely eliminate before retiring, with 48 percent of 18- to 24-year-olds and 39 percent of 25- to 34-year-olds choosing this response. Young adults are also more likely than other generations to say they want to eliminate family and children expenses such as college costs before retiring.
Unfortunately, carrying debt into retirement is more common than you think — largely because housing debt has increased over the past couple of decades, according to the Employee Benefit Research Institute. Eliminating mortgage debt before retirement certainly would help free up more income in retirement.
2 in 5 Americans Want to Own a Vacation Home in Retirement
When asked what they would most like to own in retirement, the most common answer among respondents was a vacation home, with 41 percent choosing this answer. Americans are much more likely to want to buy a vacation home than property in another country, a motorhome or RV, a luxury car or a boat. This holds true across the generations and among both women and men, the survey found.
Interestingly, adults ages 65 and older are more likely than any other generation to want to own a luxury car in retirement, with 23 percent of respondents in this age group choosing this answer. Young adults, on the other hand, are more likely than other generations to say they want to own a boat or property in another country in retirement.
Of course, it wouldn’t be financially smart to make any of these purchases if it means taking on more debt. Overspending and racking up debt are mistakes you don’t want to make in retirement.
The Ideal Retirement Age in America Is 58.5
The average American thinks they will retire at age 66, according to Gallup research. But the GOBankingRates survey found that isn’t the age at which Americans ideally want to retire. On average, the dream retirement age is actually 58.5.
The average age at which both men and women want to retire also is 58. However, there’s more variation across the generations. Respondents ages 35 to 44 wanted to retire the soonest – at age 54, on average. Baby boomers ages 55 to 64 said their dream retirement age is 61. And adults 65 and older said they wanted to retire at 66.
|Ideal Retirement Age, by Gender and Age|
|Ages 65 and Over||65.9|
Keep in mind, though, that these are Americans’ dream retirement ages. In reality, nearly a quarter of Americans believe they’ll never retire, another GOBankingRates’ survey found. However, retirement might be out of reach for an even higher percentage of people than that, given the low savings rate in the U.S.
The GOBankingRates 2018 Retirement Savings Survey found that 42 percent of Americans have less than $10,000 in savings. That’s likely not enough to get through one year of retirement without a pension or source of income other than Social Security.
With such a large percentage of Americans with so little saved, the dream retirement age of 58.5 will likely remain just that – a dream. Unless you make saving a priority, you probably won’t retire as early as you might think.
Americans Want to Spend Their Retirement Traveling and Spending Time With Family
There are a variety of ways Americans want to spend their retirement, but the most common is with friends and family. The survey found that 35 percent of respondents said spending more time with loved ones is their retirement dream. And Americans are more likely to want live close to family in retirement than other places such as in the country or even the beach.
However, traveling the world was a close second for the way people want to spend their retirement, with 32 percent choosing this option. But it was the most popular retirement dream for young adults ages 18 to 24, with 43 percent saying they want to travel the world in retirement. This age group is the least likely of any age group to answer that spending more time with loved ones would be their dream retirement. They’re also the least likely to say that they want to volunteer more in retirement.
|Retirement Aspirations, by Gender and Age|
|Working and Making Money||Pursuing Hobbies||Spending Time With Loved Ones||Traveling the World||Volunteering/Charity Work|
|Ages 65 and Over||8%||9%||41%||26%||17%|
Adults 65 and older are most likely to say they want to live close to family in retirement, with 37 percent choosing this option. And women are more likely than men to want to spend retirement close to family, 30 percent versus 24 percent. The least popular place where Americans would want to spend retirement is in a big city, with only 6 percent choosing this option.
|Where Americans Want to Spend Their Retirement, by Age and Gender|
|Traveling the World||In a Major City||In the Suburbs||In the Countryside||Somewhere Close to Family||Somewhere Tropical|
|Ages 65 and Over||20%||4%||4%||17%||37%||16%|
|*Percentages might not add up exactly to 100% due to rounding.|
How to Plan the Retirement of Your Dreams
If Americans want to retire sooner rather than later and have the retirement of their dreams, they will need to save more. The average Social Security benefit is just $1,413 a month, which is only $16,956 a year. With that level of income alone, it would be tough to have a comfortable retirement — unless you move somewhere where your Social Security check goes further.
Fortunately, it’s never too late to start saving more, even if you’re close to retirement age. One of the best ways to catch up on retirement savings is to work longer. That means a dream retirement age of 58 might be out of the question. But you’re more likely to increase your chances of having enough for a comfortable retirement if you spend more years making money — and setting aside at least 15 percent of your paycheck — and fewer years in retirement withdrawing savings.
If you’re still young and decades away from retirement, don’t assume you have plenty of time to save. The sooner you start setting money aside, the easier it will be to save enough for a dream retirement thanks to the power of compound interest. If you started saving $502 a month at age 25 and earned a 6 percent annual return, you could save $1 million for retirement by age 65. However, if you waited until age 45 to get started, you’d need to save $2,164 a month with a 6 percent return to have $1 million by age 65.
For more tips, find out how much you should have in your retirement fund at every age.
More on Retirement Planning
- How Long $1 Million in Retirement Will Last in Every State
- Here’s Why These 20 Cities Are the Worst for Retirees
- Best and Worst States to Retire Rich
- Watch: How One Couple Retired in Their 30s to Travel in an Airstream RV
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Methodology: For this survey, GOBankingRates polled 1,019 Americans from Sept. 10, 2018-Sept. 17, 2018, and asked the following six questions: 1) What is your dream retirement age? 2) What are your retirement dreams/aspirations? Please select all that apply. 3) Ideally, how much would you have saved for retirement by the time you retire? 4) Out of the following expenses, which do you dream of completely eliminating before you enter retirement? Please select all that apply. 5) Which of the following would you like to own most in retirement? 6) Where would you most like to spend your dream retirement?
This article originally appeared on GOBankingRates.com: Americans Have No Idea How Much They Actually Need for Retirement