Many Americans will need to save more for retirement

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Many Americans will need to save more for retirement

Many people believe that they will need to save a significant amount of money for retirement.

A new report from data firm Escalent suggests the most common way folks set retirement savings goals is simply by doing the math 'off the top of their head,' according to survey responses from about 4,000 savers participating in a retirement plan.

In efforts to date, participants aren't able to grasp how much money is required to live comfortably in retirement until they get really close to making that important transition, said Sonia Davis, lead author of the report.

4 out of 10 survey respondents admitted to calculating their retirement savings goals off the top of their head, or without much thought, the survey found. Other popular methods of determining how much money they'll need to retire include using online calculators, consulting a financial advisor and creating personalized spreadsheets.

The company also asked savers to estimate the amount of money they'll need in retirement. The answers, predictably, ranged greatly by age.

Gen Zers - or people born after 1996 - said they'd need the least amount: about $500 million. Younger,'second wave' baby boomers - generally believed to be born between 1956 and 1964 - said they'll need the most, $1.2 million on average. The average was $US$950,000, down from $US$950,000 a year earlier.

Americans say they will need at least $1 million a year to retire comfortably. A June report by Northwestern Mutual put that price tag at $1.3 million. In an August reading of Charles Schwab, workers expect they'll need almost $2 million.

Retirement savers may be worried about inflation and stock market volatility, causing them to increase their expectations for how much money they'll need to sock away for their golden years.

As Escalent's study suggests, people could just be winging it when asked.

Fortunately, at least a quarter of thesurveyed individuals had the right idea by consulting a financial advisor to help them come up with a tailored figure. By the time you reach 67, everyone's situation is different, but a good rule of thumb is to have saved up between 8 and 12 times your annual salary - depending on your standard of living you want to maintain.

Jill Cornfield, 79, has covered retirement for more than 10 years. I agree to the terms of use and privacy notice of Money and consent to the processing of my personal information.

Americans are saving more and feeling better about retirement, according to the National Institute of Health.

The number of 401 millionaires is back on the rise as accounts balances surge.

All information provided here is accurate as of the published date.