Many Americans have no idea how much they need to save for retirement — and the calculus is getting even more complicated

Knowing how much to save for retirement is already a gamble. Inflation and the uncertainty of Social Security are making it even harder to calculate.

• How much money people need in retirement isn't one defined answer — it really depends.
• While some workers think they'll need $1.5 million or more, many don't have nearly that much.
• And while some retirees rely on Social Security, those benefits may not be paid in full in just 10 or so years.

What's your magic number for retirement? Many Americans don't know, and it's getting even harder to calculate — especially as Social Security is poised to start reducing benefits in just about a decade.

But those who do calculate it are upping their savings. According to a press release about the Employee Benefit Research Institute's recent 2024 Retirement Confidence Survey conducted in January with Greenwald Research and with a sample of 1,255 workers and 1,266 retirees, half "of Americans have tried to calculate how much money they will need in retirement."

"In reaction to their calculation, 52% of workers and 44% of retirees started to save more," the press release stated.

A third of respondents who are working and had attempted to calculate their retirement needs think they'll need $1.5 million or more in retirement.

Similarly, an AARP Financial Security Trends Survey conducted in January showed over a quarter of people aged 50 and over think they will need to save $1 million or more to feel financially secure in retirement.

That's quite a bit more than what workers actually have in savings.

A third of workers in the EBRI and Greenwald Research survey have less than $50,000 in savings and investments. And while they could use that for retirement, there's always the chance they'll have to dip into those savings for other unexpected costs.

So how can you calculate what might be right for you?

Craig Copeland, director of Wealth Benefits Research at the Employee Benefit Research Institute, told Business Insider that there isn't just one correct number for retirement savings because it depends on different factors for each individual, such as where they live and their lifestyle.

In addition, Americans looking toward retirement could see unexpected inflation like we saw in the last few years or a similarly unpredictable stock market. Finally, Social Security is facing a decline in payouts in just over a decade. It all adds up to a lot of confusion and fear about Americans' golden years.

"That number is all over the place," Copeland said, referring to how much people are going to need in retirement savings. "Some people use a multiple of their salary; some have suggested that you need 10 times your salary in assets. That's sometimes where someone has a six-figure income, you'd expect to have a million dollars."

Social Security's uncertainty and inflation add to complications

Social Security is also a key contributor toward financial comfort in retirement. According to the survey, 88% of workers expect Social Security to be an income source in retirement, with 91% of retirees confirming that sentiment, reporting the federal benefit as one of their income sources.

Those relying on Social Security just got some new information on the fate of the program — the latest Social Security and Medicare Boards of Trustees report found that the program will not be able to pay out full benefits beginning in 2035, a year later than expected. While that offers a bit of breathing room for the funds and new retirees — who would start receiving 83% of the full benefits come 2035 — it could still be a major blow to workers' prospects if Social Security goes unfunded.

"It will be devastating if people who already are facing very dire retirement prospects get less Social Security than they're planning on. That would be devastating because, for too many people, Social Security provides the bulk of their income in retirement," William Arnone, the CEO of the non-partisan National Academy of Social Insurance, told BI.

While people are likely going to need to rely on savings during retirement, some may also need to pick up some type of work as a retiree. Estimating how much you will need in retirement may be helpful, even long before retirement.

Copeland said people "need to be aware that that backup source isn't always going to be there and that they need to think about making sure that they can get enough savings, that they have that buffer, because many people end up retiring before they expect to or may want to." Copeland said that a health issue could be one of the reasons behind this earlier retirement.

Some workers think they will also have to work for pay in retirement: 75% of workers said so in the survey, including 40% who said part-time work and 24% who said seasonal or sporadic work. That's compared to almost a third of retirees who said this, including 17% who said they have worked part time.

"Every adult in America deserves to retire with dignity and financial security," Indira Venkateswaran, AARP senior vice president of research, said in a statement. "Yet far too many people lack access to retirement savings options and this, coupled with higher prices, is making it increasingly hard for people to choose when to retire."

Still, the survey from EBRI and Greenwald Research found that "30% of retirees say their overall lifestyle in retirement is better than expected." Almost half of retirees said they somewhat agree that they're able to spend money how they want to now as a retiree, within reason.

That highlights the fact that calculating how much you're going to actually need in retirement is complicated.

"We do see that the people that actually do a calculation become more confident and they start doing things that will get them in that direction," Copeland said. "They'll start saving more and they'll start developing plans for what they're doing. So it's really a matter of getting people to really focus on what they need and start building a plan toward that."

What do your retirement outlook and savings look like? Reach out to these reporters to share at mhoff@businessinsider.com, asheffey@businessinsider.com, and jkaplan@businessinsider.com.