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Yahoo
30-04-2025
- Business
- Yahoo
There's a new ‘magic number' Americans now say they'll need to retire comfortably — and it's shrunk since 2024
Humans often seek easy answers and shortcuts. This is not always a flaw, but a form of efficiency. So, it's no surprise that we want a 'magic' answer to one of the biggest financial decisions we need to make: how much to save for retirement. As a result, we often have a 'magic number' in mind for our retirement savings. This year, that 'magic number' Americans believe they'll need to retire comfortably is $1.26 million, according to Northwest Mutual's 2025 Planning & Progress Study. This is $200,000 less than the estimated $1.46 million they believed they'd need when they were surveyed last year. This number is also more in line with the 2022 and 2023 estimates, indicating a reversal in thinking from last year to the years before. I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 5 of the easiest ways you can catch up (and fast) Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how Nervous about the stock market in 2025? Find out how you can access this $1B private real estate fund (with as little as $10) It's likely that the decline in the 'magic number' from last year is at least partially related to declines in inflation, which has been falling — albeit unevenly — since peaking in the summer of 2022. As inflation has fallen, so too have expectations of future inflation, which were lower in 2024 than in the previous couple of years. This suggests that for that year, future retirees may not believe high inflation would eat away at their retirement savings, compared to years prior. It may also be that views on retirement are changing. Whether by necessity or intention, about half of workers plan not to retire before the 'traditional' age of 65 and 39% expect to retire only at 70 or older, or not to retire at all, according to a report by the Transamerica Center for Retirement Studies. This could mean a shorter retirement and additional income during this period, reducing the size of an individual's needed nest egg. Before you start worrying about achieving that 'magic number,' it's worthwhile to determine if it's a reasonable goal. In 2023, the average expenditure for a household where the 'head' of the household is 65 years or older was $60,087, according to the U.S. Bureau of Labor Statistics. Assuming most retirees will collect Social Security benefits — averaging about $1,997 in March 2025 (just under $24,000 a year), and further assuming only one member of the household will collect benefits, a household would need an additional sum of about $36,000 a year to cover expenses. A common rule of thumb is to withdraw 4% of your nest egg in the first year of retirement and then to continue withdrawing that amount (adjusted for inflation) each year afterward. This would allow your nest egg to provide income for the duration of most retirements. If you need $36,000 per year, then you'd need an initial nest egg of about $900,000 — making $1.26 million more than many need. But research by the Employee Benefits Research Institute shows that retirees are cutting back on expenditures because of insufficient income, so using actual expenditures may give a more accurate picture of the amount retirees will need to live comfortably. Read more: This hedge fund legend warns US stock market will crash a stunning 80% — claims 'Armageddon' is coming. Don't believe him? He earned 4,144% during COVID. Here's 3 ways to protect yourself Another retirement rule of thumb is to estimate that you'll need 70% to 80% of your pre-retirement income to retire comfortably. Real median household income in the U.S. was $80,610 in 2023, according to the U.S. Census Bureau. A range of 70% to 80% would be about $56,000 to $65,000, which — when applying $24,000 from Social Security — implies a required nest egg of $800,000 to $1.025 million, which is still below the 'magic number' of $1.26 million. While the 'magic number' may be higher than many people need, calculations that use averages, medians and rules of thumb don't help you determine what your exact number should be — and your own situation is likely to be quite unique. After all, retirement is a very personal thing. If you want to estimate what your own 'magic number' might be, it's worth speaking to a financial advisor. Many advisors have access to modeling programs that factor in your personal circumstances and plans for retirement to come up with a number that works for you. Once they know this number, they can set up a suitable savings and investment program so you can reach this goal. A helpful feature is that these models can be used to run scenarios — such as accounting for higher inflation — to see how this might affect your plans. There are several factors that go into figuring out your number. Where you plan to retire can make a big difference, as can what you plan to do in retirement. Some states are much more expensive than others for retirees, while others continue to be popular. And if you plan to travel a lot, this is likely to cost you more than if you plan to stay close to home and spend time with your children and grandchildren. Healthcare can be a big expense that grows through retirement. It's impossible to predict what health challenges you may encounter, but if you already have chronic conditions that may get worse with time, it's important to consider how this might lead to extra expenses in retirement and require a larger nest egg. Non-investment sources of income will also play a role. Most retirees are at least somewhat reliant on Social Security and some may have a pension — or even plan to work part-time in their semi-retirement years. You may want to have a 'magic number' — but you should arrive at it through analysis of your own unique situation. And you should be prepared to change that number if your retirement goals or circumstances change as you age. Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan 'works every single time' to kill debt, get rich in America — and that 'anyone' can do it Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead Here are 5 'must have' items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you? This article provides information only and should not be construed as advice. It is provided without warranty of any kind. Sign in to access your portfolio
Yahoo
19-04-2025
- Business
- Yahoo
A staggering 40% of Gen Zers plan to splurge more on non-essentials this year. Is it time for a reality check?
As Trump's trade policies continue to send shockwaves through the economy — creating fears of rising prices, layoffs and a potential recession — investors are bracing for impact. With markets in flux and uncertainty in the air, financial anxiety is mounting. While no one can control the stock market, The Washington Post's personal finance columnist Michelle Singletary says there's one thing people can take charge of: their spending. But according to new data, Generation Z isn't exactly slamming the brakes. I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 5 of the easiest ways you can catch up (and fast) Nervous about the stock market in 2025? Find out how you can access this $1B private real estate fund (with as little as $10) Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how In fact, 40% of Gen Zers plan to spend more on non-essential purchases in 2025 compared to last year, according to Northwestern Mutual's latest Planning & Progress Study — earning the title 'Spend Z.' Their intention to spend outpaces every other generation and persists despite credit card bills (22%) and personal education loans (16%) being their main sources of outstanding debt. While many in this position might choose to cut back on non-essential spending, Gen Z as a whole doesn't seem to want to make any sacrifices. On a recent episode of the Post Reports podcast, Singletary didn't mince words when offering advice to young adults navigating these choppy waters: 'You have to put your adult hat on and say, 'You know what? I wish I could eat out, but I can't.'' That may be easier said than done in an age where Uber Eats orders and late-night Shein scrolls feel like self-care rituals. But experts warn that trading savings for short-term splurges could leave young consumers vulnerable — especially with the economy on shaky ground. There's a good chance you may have found yourself uttering the phrase, 'I really shouldn't be spending this much' — mid trip to the mall with an oat milk latte in hand. But despite headlines warning of an economic slowdown and the not-so-soft whisper of a recession, a growing number of young adults are choosing indulgences over budgets. According to a 2023 Morning Consult report, Gen Zers and millennials are spending more than $400 a month on non-essential purchases like travel, recreation and dining out. That's significantly higher than the $250 Gen Xers spend and double the nearly $200 boomer benchmark. The economy as a whole is still banking on consumer resilience. The National Retail Federation projects 2025 retail sales will hit $5.42 trillion, perhaps driven in part by younger generations keeping their wallets open, even as their savings shrink. While the impact of economic uncertainty may not yet be visible in your day-to-day life, it's likely on the horizon. And when it arrives, you'll want more than just a closet full of trending accessories. A well-padded emergency fund will offer the kind of value fast fashion can't. Read more: The US stock market's 'fear gauge' has exploded — but this 1 'shockproof' asset is up 14% and helping American retirees stay calm. Here's how to own it ASAP Prioritizing wants over needs during economic uncertainty can leave young consumers vulnerable to debt, with little to fall back on when the unexpected hits. 'Now that you're a young adult, you've got bills to pay. You have to save for retirement. You have to save for an emergency fund. Maybe you've got young children yourselves,' Singletary said on the podcast. You can start by building a budget. Not just a mental tally of your spending — but a written, trackable plan that accounts for fixed expenses, savings goals and the real cost of lifestyle choices. Even small changes can have a lasting impact. For example, swapping food delivery for planned grocery runs can save hundreds each month while teaching discipline in spending. Next, it would be a good idea to create an emergency fund. You could aim to save up three to six months' worth of your essential expenses and make each contribution non-negotiable, like rent. This cushion can help cover job loss, medical bills or even the inevitable life hiccup — all without reaching for a credit card. Aside from an emergency fund, you could also start contributing to a retirement account — whether it's a Roth IRA or 401(k). Putting even a small amount away now allows compound interest to do the heavy lifting long term. And if you're still craving that big splurge, you can budget for it by setting aside a small amount regularly and make it a conscious reward — not a spontaneous swipe. Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan 'works every single time' to kill debt, get rich in America — and that 'anyone' can do it Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead Here are 5 'must have' items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you? This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Yahoo
01-04-2025
- Business
- Yahoo
I can barely afford my home and want to sell — what are the financial impacts of being mortgage-free?
Owning a home these days can be challenging, especially with elevated mortgage rates and sky-high home prices. In fact, more than half (53%) of Americans who don't own a home don't believe they will ever be able to afford one, according to Northwestern Mutual's 2025 Planning & Progress Study. But what if you've bought a home and come to regret it? What if you're barely able to get by after home insurance, upkeep and maintenance costs, not to mention property taxes and any management fees? I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 5 of the easiest ways you can catch up (and fast) Nervous about the stock market in 2025? Find out how you can access this $1B private real estate fund (with as little as $10) Americans with upside-down car loans owe more money than ever before — and drivers can't keep up. Here are 3 ways to cut your monthly costs ASAP Selling your property and saying goodbye to homeownership can have benefits, but there are also drawbacks to consider. Selling your home could put a pile of cash in your pocket if you have equity. But you could also end up with a tax bill on your hands. There's a capital gains tax exclusion of $250,000 for single tax-filers and $500,000 for joint filers for people who sell their homes. You should qualify if the house was your primary residence and if you owned it for at least two years before selling it. You also need to have lived in the home for at least two years in the five-year period before selling it, and you can't have claimed another capital gains exclusion for the sale of a house in the two-year period before your sale. But if you're selling your home for a profit exceeding the capital gains tax exclusion you're eligible for, you could have a tax bill. For example, if you're single and bought your home for $200,000, but it's now being sold for $600,000, you have a $400,000 gain. However, only $250,000 is eligible for the exclusion, meaning you have to pay taxes on the remaining $150,000. On the other hand, a near-term tax hit may be worth it if you can invest your sale proceeds and grow them into a more considerable sum. Read more: Are you rich enough to join the top 1%? Here's the net worth you need to rank among America's wealthiest — plus 2 ways to build that first-class portfolio There's nothing wrong with deciding that owning a home isn't right for you. But it's important to understand the long-term effects. Homeowners who itemize their taxes may be able to deduct mortgage interest as well as property taxes as part of the SALT (state and local tax) deduction. If you never buy another home, you'll lose that tax break. As a renter instead of an owner, you also lose some of the stability of homeownership. For example, you may suddenly see your rent increase or be forced to move, and there's little you can do about it. If you have children, this can be even more unnerving if you want to stay in the same school district throughout your kids' education, which could cause some upheaval. Also, homes tend to gain value over time, and owning a home can be a means of forcing long-term savings. If you reach retirement age without much savings but have a home with a few hundred thousand dollars of equity, downsizing and collecting the proceeds could subsidize your IRA or 401(k) balance. On the plus side, being a renter means enjoying fixed monthly costs for the life of each lease you sign. And you don't have to deal with the hidden costs of ownership, such as surprise home repairs and insurance premiums. Despite less security, it can work out to be less expensive this way. Of course, it's recommended that you discuss the long-term implications of not owning a home with a financial adviser. They can explain the pros and cons and help you make the most of your sale proceeds should you decide to sell your house and set aside homeownership. Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan 'works every single time' to kill debt, get rich in America — and that 'anyone' can do it Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead Protect your retirement savings with these 5 essential money moves — most of which you can complete in just minutes This article provides information only and should not be construed as advice. It is provided without warranty of any kind. Sign in to access your portfolio
