Affluent Americans’ retirement target hits $2.6M, HSBC survey finds

Affluent Americans now say they need $2.6 million to retire comfortably, up 26% from a year earlier, but the typical investor has accumulated only about half that sum, new HSBC research shows.

The survey, conducted by Ipsos on behalf of the global bank, covered almost 10,000 affluent and high-net-worth investors across 10 markets. US respondents reported saving 52% of their goal on average, leaving a shortfall of roughly $1.25 million against the $2.6 million target.

Across all 10 markets, HSBC put the perceived cost of retirement at $1.26 million, with investors holding 49% of their target on average.

The gap exists for every age group, though it's smaller for older generations further along in their accumulation journey. Baby boomers, the closest to leaving work, reported having 74% of their goal in hand, while Gen X stood at 55%. Gen Z, at 45%, edged out millennials at 42%.

Why the retirement savings gap keeps widening

HSBC's research ties the shortfall to clients trying to fund several stages of life at the same time, as seven in 10 US respondents said their plans no longer follow a neat sequence. Retirement remains the most common priority, cited by 43%, but 39% are also paying for other life resets, such as a career change, a new business, a planned break or new skills. Another 37%, meanwhile, said they're caught between supporting both children and aging parents.

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“A comfortable retirement is becoming more expensive, even for those with substantial wealth,” said Racquel Oden, US head of international wealth and premier banking at HSBC. “As investors build careers, raise families, support aging parents and save for retirement all at once, flexible planning and expert guidance are more important than ever to help them stay on track toward their goals.”

Investors appear to agree. Some 76% of US respondents said they want expert guidance and specialist help with competing priorities, and 75% want wealth products flexible enough to serve multiple needs.

Retirement as a gradual exit

Clients are also changing how they stop working. Among US respondents not yet retired, 64% expect to take a phased exit from work, stepping back gradually rather than quit outright. Of those, 34% plan to reduce their hours over time, 21% intend to move into an advisory role or passion project, and 10% plan to take mini-retirements.

The idea of a mini-retirement has caught on among a growing number of Americans, with recent research by MassMutual finding 15% have taken one, and 34% saying they've either considered it or might think about it in the future. Still, 72% are worried it would take away from their retirement security; 34% of non-retired respondents said not having enough savings is holding them back from test driving retirement, and another 23% pointed to the fear of losing steady income.

Longer life spans are reshaping legacy plans as well. Some 59% of Americans in HSBC's research said living longer has already changed their approach to passing on wealth, and 31% are setting aside more for future costs such as long-term health care, even if that reduces what heirs receive. Still, 55% expect to leave a significant legacy, with a median value of $900,000.

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The HSBC number is close to other estimates for wealthier households. According to one estimate by Northwestern Mutual, Americans with more than $1 million in investable assets put their number at $2.67 million on average, well above the $1.46 million retirement savings target reported for all Americans in the same study.