Most Americans are woefully underprepared for retirement. Based on analysis of Federal Reserve data by the accounting firm PwC, the typical American between the ages of 55 and 64 has just $120,000 in a retirement savings account. Though the vast majority of retirees supplement their savings with Social Security income, the average monthly Social Security payment is only $1,694 - not nearly enough to cover typical living expenses, let alone luxuries like travel and dining out.Partially as a result, the number of Americans working past retirement age is rising fast. Data from the Bureau of Labor Statistics shows that more than 26% Americans between ages 65 to 74 were still working in 2020, and that share is projected to hit 32% by 2030. In 1995, about 17.5% of Americans that age were working, and the percentage was even lower before that.
For those who do not want to work past age 65 and still be financially secure, there is a certain amount of money they can expect to need. This amount should account for expenditures throughout retirement and can come from retirement savings or other sources of income.
According to the Consumer Expenditure Survey from the Bureau of Labor Statistics, the typical retirement-age American spent $52,141 in 2021. Adjusting this figure for average state-level cost of living, inflation, and average life expectancy at age 65 - plus a 15% financial cushion - Illinois residents can reasonably expect to spend, on average, $1,345,057 over the course of their retirement starting at age 65, the 16th highest amount of all states.
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