How much you REALLY need in retirement savings – as one economist reveals it’s far less than you think

A senior think tank economist has revealed how much Americans really need to save in their retirement accounts – and it’s far less than a million dollars.

According to Andrew Biggs, a senior fellow at the American Enterprise Institute think tank, the average senior who reported having a satisfactory retirement had $50,000 to $100,000 in savings.

In the past, financial gurus have claimed that the average American would need $1.46 million, or more than ten times his salary, in savings to be financially secure in his old age.

But the Federal Reserve The latest from the board study entitled ‘Survey of Household Economics and Decisionmaking’ claims otherwise.

According to Andrew Biggs, a senior fellow at the American Enterprise Institute think tank, the average senior reported having a satisfactory retirement, with $50,000 to $100,000 in savings.

The survey asked retirement-age Americans, “Which of the following best describes, in general, how well you are doing financially?”

Of respondents in the 65 to 74 age group, 3 percent said they were “finding it hard to make ends meet,” 12 percent were “just making ends meet,” 37 percent were “doing well” and 49 percent were “living comfortably.”

The Federal Reserve Board researchers also asked, “Approximately how much do you currently have saved for retirement?” with options ranging from “under $10,000” to “over $1 million.”

Of those surveyed, only 19 percent said they had less than $10,000, while 86 percent said they were doing well or living comfortably with $50,000 to $99,999 in their bank account.

Biggs also noted that these amounts would be sufficient for a retiree because other sources of income, such as Social Security, are much more beneficial than people realize and many could simply live off their security checks before even dipping into their own savings accounts.

‘Social benefits are more generous than people think. While hardly extravagant, a typical couple can expect to earn an income more than twice the poverty line for the elderly before touching a cent of their own savings.

“It is impossible to find any evidence that seniors need even a fraction of $1.46 million in savings to be financially secure,” Biggs wrote in his article. Wall Street Journal column.

The Federal Reserve Board concluded at the end of the study that the average American only needed something between $50,000 and $99,999 to “do well” and $100,000 to $249,000 to “live comfortably.”

Earlier last month, personal finance expert Suze Orman advised those who eventually want to retire to put all their money away money you can in a Roth IRA.

A Roth IRA is a type of individual retirement account where you contribute after-tax dollars from your paycheck — and if money whiz Orman points out that all future withdrawals are tax-free.

That’s a lot more financial freedom than those offered by other retirement plans, including a 401(k).

Those kinds of bills are funded with pre-tax money, she adds, so your entire dollar has a chance to compound.

At a time when every cent counts, advice is more than welcome and can give your money a much-needed boost.

“If you’re not saving for retirement in a Roth, I think there’s a good chance you’re making a mistake,” former CNBC host Suze Orman told Benzinga, touting the specific type of retirement account.

In terms of inheritance, heirs can inherit Roth accounts without the burden of income taxes, she said — not the case with cash or inheritances, of which Uncle Sam will always get a cut.

This could be a significant benefit for those in a higher tax bracket, Orman pointed out, telling Americans how to protect the wealth they’ve worked hard for.

For the less fortunate, there are no tax breaks for the current year, so your contributions – no matter how small – can grow tax-free.

This can be done once the account has been open for five years, or after the account holder reaches age 59.5, Orman denied, while repeatedly touting the flexibility of Roth’s penalty-free withdrawals.

A Roth 401(k) — available only through certain employers — is even better, she said.

The main difference between a Roth and a traditional 401(k) is when taxes are charged, she added. She explained how in a traditional 401(k), contributions are made pre-tax, while in a Roth 401(k), contributions are taxed. in front.