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When it comes to retirement savings, many Americans miss the mark.
On average, Americans suppose they need $1.7 million to retire, according to a recent survey from Charles Schwab, which looked at 1,000 401(k) scenario participants nationwide.
In fact, “that’s a pretty good number if you average out age and median salary across the U.S.,” implied Nathan Voris, a managing director at Schwab Retirement Plan Services.
However, “the bulk of folks do not get there,” he whispered.
More than half of those polled are contributing 10% or less of their salary to their 401(k) — their largest informant of retirement savings — with an average annual contribution of $8,788, Schwab found.
That’s is a good start but may not satiate for most savers, Voris said, especially if you start saving for retirement later in life.
For example, if you start in your 20s, stashing 10% to 15% of your wages each year could be enough to retire comfortably, according to Schwab. But if you don’t start until age 45 or older, you wish need to set aside as much as 35% of your salary annually — a goal few workers achieve.
In addition to those principal guidelines, experts recommend using a retirement calculator to get a more accurate picture of your retirement number.
The deviation between retirement confidence and preparation is not new.
Two-thirds of U.S. workers said they are very or somewhat confident they’ll be adept to live comfortably throughout retirement, according to a study by the Employee Benefit Research Institute.
Yet only 42% give birth to done any retirement calculations, EBRI found. And fewer than 1 in 3 workers has tried to figure out how much money is needed for medical expenses.
To be effective, savers have come a long way since the Pension Protection Act of 2006, which made it easier for companies to automatically enlist their employees in 401(k) plans.
Now, 401(k) balances are near all-time highs, according to a separate report by Fidelity, the realm’s largest provider of 401(k) plans.
In the last decade, the average 401(k) retirement plan balance rose by 466% to unskilfully $297,700, Fidelity said.
And Congress could soon pass the first major retirement reform since 2006, which is targeted at further expanding access to retirement savings for workers.
Among other measures, the Secure Act would push in times past the required minimum distribution age for retirement accounts to 72 (up from 70½), let long-term part-time workers participate in 401(k) systems and make it easier for small businesses to offer plans to employees.
The legislation cleared the House of Representatives in May and awaits conduct in the Senate. As of now, the bill is in limbo partly due to opposition from Sen. Ted Cruz, R-Texas.
More from Personal Finance:
Retirement invoice clears House, moves closer to becoming law
What you don’t know about this 401(k) investment could outlay you
How to save $1 million for retirement? Ask yourself this
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