More middle-class Americans expect to work past the traditional retirement age, according to a new study conducted by Wells Fargo.
The survey found that 72% of middle-class Americans between the ages of 25 and 69 expect to work through their retirement years. The notion is driven partly by lifestyle choice, with 33% of Americans saying they will continue to work because they want to. But according to Laurie Nordquist, director of Wells Fargo Institutional Retirement and Trust, the trend also pertains to deep deficits in personal retirement savings.
According to the study, Americans, on average, believe that they need a nest egg of about $300,000 before they can stop working. They’re estimation isn’t far off: Last year’s data from the Employee Benefit Research Institute found that a typical American couple looking to retire needs to squirrel $338,000 away to live comfortably.
Unfortunately, the majority of Americans don’t have anywhere near that amount in their retirement savings. On average, the study found respondents have only $20,000 saved for their golden years.
More pointedly, however, those nearing retirement (age 50-59) have put away $29,000 thus far. If they were to use their retirement savings as they predicted – for the next 20 years, while taking 5% out at a time – they would have to live off a mere $190 a month.
“Most middle class Americans haven’t done the math,” Nordquist said. “People are not even close to where they need to be in total savings. Barring a miracle, a winning lottery ticket or a big inheritance, they’re going to be forced to dramatically cut back their lifestyles after retirement.”