Finance
The ‘magic number’ to retire comfortably hits a new all-time high
FOX Business’ Ashley Webster talks to diners in The Villages, Florida about retirement as a Northwestern Mutual survey claims it will take $1.46M to retire comfortably.
Inflation has made the cost of just about everything in the U.S. more expensive – including retirement.
A new study published by Northwestern Mutual found the “magic number” that Americans believe they need in order to retire comfortably hit $1.46 million this year, the highest level on record.
The figure represents a nearly 15% jump from the $1.27 million that Americans said they needed in 2023, easily outstripping the current 3% inflation rate in the country.
Over the past five years, Americans’ “magic number” has surged 53% from the $951,000 reported in 2020, according to the financial services firm.
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The figure represents a nearly 15% jump from the $1.27 million that Americans said they needed in 2023, easily outstripping the current 3% inflation rate in the country. (iStock / iStock)
By generation, both Gen Z and millennials anticipate they will need more than $1.6 million to retire comfortably. Among high net-worth individuals – or those with more than $1 million in investable assets – the figure catapults to about $4 million.
Even though they expect to need more money in retirement, Americans are not actually saving more.
The average amount that U.S. adults have tucked away for retirement fell to $88,400 from $89,300 in 2023. However, that is down more than $10,000 from the five-year peak of $98,800 in 2021, the study said. In total, the gap between what people think they need for retirement and what they have actually saved is $1.37 million. By comparison, just five years ago, that was about $874,000.
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“Across all segments, there are large gaps between what people think they’ll need to retire and what they’ve saved to date,” the study said.
The study comes as Americans continue to confront stubbornly high inflation that has rapidly eroded their purchasing power and, in some cases, forced them to use their retirement savings as a financial lifeline.
Shoppers are seen in a Kroger supermarket on Oct. 14, 2022, in Atlanta. (Photo by Elijah Nouvelage / AFP / Getty Images)
A separate study by the Alliance Life Insurance Company of North America shows that nearly 7 in 10 respondents said they have not contributed as much to their savings due to higher prices for everyday goods, while 42% of households reported dipping into their retirement savings.
“The rising cost of living is stretching American budgets,” said Kelly LaVigne, vice president of consumer insights at Allianz Life. “Just because inflation has slowed doesn’t mean prices have gone down. In the short term, it may be wise to delay any major purchases to keep saving toward your future and avoid taking on new debt.”
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Inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent. The burden is disproportionately borne by low-income Americans, whose already-stretched paychecks are heavily impacted by price fluctuations.
While inflation has fallen considerably from a peak of 9.1% notched during June 2022, it remains above the Federal Reserve’s 2% goal. And when compared with January 2021, shortly before the inflation crisis began, prices are up a stunning 18.49%.
The uranium trade’s shelf life may last years.
According to Sprott Asset Management CEO John Ciampaglia, a “real shift” upward is underway due to increasing global energy demand — particularly as major tech companies look to power artificial intelligence data centers.
“We’ve been talking about uranium and nuclear energy non-stop for four years at Sprott, and we’ve been incredibly bullish on the segment,” he told CNBC’s “ETF Edge” this week.
Ciampaglia’s firm runs the Sprott Physical Uranium Trust (SRUUF), which Morningstar ranks as the world’s largest physical uranium fund. It’s up 22% over the past two months.
The firm is also behind the Sprott Uranium Miners ETF (URNM), which is up almost 38% over the past two months. The Sprott website lists Cameco and NAC Kazatomprom JSC as the top two holdings in the fund as of June 12.
“It’s [uranium] a reliable form of energy. It has zero greenhouse gases. It has a very good long-term track record,” Ciampaglia said. “It provides a lot of electricity on a large scale, and that’s right now what the grid is calling for.”
Ciampaglia finds attitudes are changing toward nuclear energy because it offers energy security with a low carbon footprint. Uranium is “incredibly energy-dense” compared to most fossil fuels, he said, which makes it a promising option to ensure energy security.
He cited the 2022 energy crisis in Europe after Russia cut its oil supply to the region and April’s grid failure in Spain and Portugal as cases for more secure energy sources.
“We think this trend is long term and secular and durable,” Ciampaglia said. “With the exception of Germany, I think every country around the world has flipped back to nuclear power, which is a very powerful signal.”
‘You need reliable power’
VanEck CEO Jan van Eck is also heavily involved in the uranium space.
“You need reliable power,” he said. “These data centers can’t go down for a fraction of a second. They need to be running all the time.”
His firm is behind the VanEck Uranium and Nuclear ETF (NLR), which is up about 42% over the past two months. According to VanEck’s website as of June 12, its top three holdings are Oklo, Nuscale Power and Constellation Energy.
But he contends there’s a potential downside to the uranium trade: Building new nuclear power plants can take years.
“What’s going to happen in the meantime?” Van Eck said. “Investors are not patient, as we know.”
Van Eck also thinks it’s possible the Trump administration’s positive attitude toward nuclear power could fast track development.
He highlighted nuclear technology company Oklo during the interview. Its shares soared on Wednesday after the company announced it was anticipating a deal with the Air Force to supply nuclear power to a base in Alaska.
The agreement came not long after President Donald Trump in May signed a series of executive orders to rework the Nuclear Regulatory Commission, expedite new reactor construction and expand the domestic uranium industry.
“Trump controls federal land, so that’s not a NIMBY [not in my backyard] kind of potential risk,” said Van Eck. “They’re going to leverage that hard to start to show the safety of these newer, smaller technologies.”
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