The idea of a comfortable retirement just got a lot more expensive, and for some, it may be entirely out of reach. Most retired Americans believe they will need nearly $1.5 million in the bank to retire comfortably, according to a new study.
The majority of retirees surveyed believe that they will need $1.46 million in the bank to retire comfortably, according to Northwestern Mutual’s 2024 Planning & Progress Study. That’s a 15% increase — which far outpaces the 3% to 5% inflation rate — over last year and is up 53% from 2020.
That $1.46 million is in sharp contrast to the average amount that U.S. adults have saved for retirement — a meager $88,400 compared to $89,300 in 2023. Given that 11,000 Americans will turn 65 every day through 2027, only half of Boomers and Gen Xers believe they’ll be financially ready for retirement when the time comes.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Trends based on age and income
Do boomers and Gen Xers have enough saved for retirement?
- Only about half of Boomers (49%) and Gen Xers (48%) believe they will be financially prepared for retirement.
- On average, Gen Xers believe there is a 42% chance they could outlive their savings, while Boomers put the probability at 37%.
- By generation, both Gen Z and Millennials expect to need more than $1.6 million to retire comfortably.
- High-net-worth individuals — those with more than $1 million in investable assets — say they’ll need nearly $4 million.
Is Gen Z saving for retirement earlier than other generations?
On average, American adults say they started saving for retirement at age 31. But Gen Zers say they began at age 22 — nearly a decade earlier, hoping that starting earlier will help them reach their retirement goals sooner. That is also a full 15 years before Boomers, who say they started when they were 37. Millennials and Gen Xers began saving for retirement at ages 27 and 31, respectively.
“In 2023, the soaring cost of eggs in the grocery store symbolized inflation in America. In 2024, it’s nest eggs,” said Aditi Javeri Gokhale, Northwestern Mutual's chief strategy officer, president of retail investments, and head of institutional investments. “People’s ‘magic number’ to retire comfortably has exploded to an all-time high, and the gap between their goals and progress has never been wider.”
What generations are most prepared for retirement?
The study also showed that Boomers and Gen Xers don’t have markedly strong confidence in their retirement preparedness.
- Only 49% of Boomers and 40% of Gen Xers know how much money they will need to retire comfortably.
- Only 37% of Boomers and 35% of Gen Xers have a plan for what to do if they outlive their savings.
- Not quite 40% of Boomers and only 42% of Gen Xers have a plan if they can no longer depend on Social Security for income.
- Only 30% of Americans have a plan to minimize the taxes they pay on their retirement savings.
Investing in a future you
Unfortunately, putting money into a 401(k) or another retirement plan may no longer be enough to retire comfortably. This is especially true if you don't take into account the impact of taxes on your retirement income or you begin contributing later in your career.
Enlisting the help of a financial advisor early on in your career is vital to having a happy retirement. After all, retirement is a long game that sooner or later you’ll be forced to play.
Related Content
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
FAQs
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.
What is the new magic number to retire comfortably? ›
Additional survey findings
The magic number for a comfortable retirement — $1.46 million — is a 15% increase over the $1.27 million reported last year, and greatly exceeds today's inflation rate, which hovers between 2% and 3%, said Erik Stephens, CEO of NOVA Capital, Northwestern Mutual.
Do you actually need $1.46 million to retire comfortably? ›
People don't really know how much money they will need in retirement, and often overestimate it, Ghilarducci said. While $1.46 million might make sense as a savings target for some higher-income households, most families with lower incomes likely need far less, she said.
Do Americans think they need 1.5 million to retire? ›
Americans think they need almost $1.5 million to retire. Experts say to focus on another number instead. Americans' "magic number" savings goal for retirement has increased by over 50% since 2020. But experts say the secret to building true wealth is having a high savings rate.
How much money do you think you ll actually need to retire comfortably? ›
The majority of retirees surveyed believe that they will need $1.46 million in the bank to retire comfortably, according to Northwestern Mutual's 2024 Planning & Progress Study. That's a 15% increase — which far outpaces the 3% to 5% inflation rate — over last year and is up 53% from 2020.
How much does the average American have at retirement? ›
The answer depends almost entirely on you, your habits now and your plans for later,” the financial services firm noted on its website. Data from the Federal Reserve's most recent Survey of Consumer Finances (2022) indicates the median retirement savings account balance for all U.S. families stands at $87,000.
What is the magic number to live comfortably? ›
The latest “magic” retirement number is $1.46 million, according to Northwestern Mutual's 2024 Planning and Progress Study.
How many people have $1,000,000 in savings? ›
In fact, statistically, just 10% of Americans have saved $1 million or more for retirement. Don't feel like a failure if your nest egg isn't quite up to the seven-figure level. Regardless of your financial position, however, you should strive to save and invest as much as you can.
Why is 1.46 million the new magic number for retirement? ›
Anne Tergesen: One reason is inflation. Last year the number came in at $1.27 million, so it's up 15% from a year ago.
Is $4,000,000 enough to retire at 55? ›
Is Retiring at 55 with $4 Million Possible? The average age at which most people retire is 62, according to a 2021 Gallup Poll. But if you have $4 million in savings, it's entirely possible to retire by age 55. Retiring early offers a lot of advantages.
About 1 in 4 have no retirement savings, according to research released Wednesday by the organization that shows how a graying America is worrying more and more about how to make ends meet even as economists and policymakers say the U.S. economy has all but achieved a soft landing after two years of record inflation.
How many Americans have $5 million in retirement? ›
Data from the Employee Benefit Research Institute, based on the Federal Reserve's Survey of Consumer Finances, reveals that a mere 0.1% of retirees manage to accumulate over $5 million in their retirement accounts, whereas only 3.2% amass over $1 million.
Do most Americans have enough money to retire? ›
1 in 5 adults ages 50+ have no retirement savings, and more than half are worried they will not have enough money to support them in retirement, according to a new AARP survey. The study reflects concerns amid a shaky economy, high prices and an uncertain future.
What is the average social security check? ›
Social Security benefits are much more modest than many people realize; the average Social Security retirement benefit in February 2024 was about $1,862 per month, or about $22,344 per year. (The average disabled worker and aged widow each received less.)
How long will 700k last in retirement? ›
How long will $700k last in retirement? $700k can last you for at least 25 years in retirement if your annual spending remains around $40,000, following the 4% rule. However, it will depend on how old you are when you retire and how much you plan to spend each month as a retiree.
What percentage of retirees have $3 million dollars? ›
Specifically, those with over $1 million in retirement accounts are in the top 3% of retirees. The Employee Benefit Research Institute (EBRI) estimates that 3.2% of retirees have over $1 million, and a mere 0.1% have $5 million or more, based on data from the Federal Reserve Survey of Consumer Finances.
What is the ideal retirement number? ›
By age 35, aim to save one to one-and-a-half times your current salary for retirement. By age 50, that goal is three-and-a-half to six times your salary. By age 60, your retirement savings goal may be six to 11-times your salary. Ranges increase with age to account for a wide variety of incomes and situations.
Is the new number for retirement 1.46 million? ›
Americans' “magic number” for retirement surged to an all-time high – rising much faster than the rate of inflation while swelling more than 50% since the onset of the pandemic.
What is a good number to have saved for retirement? ›
At ages 56 to 60, you should have saved 7.6 times your current salary. At ages 61 to 64, you should have saved 9.2 times your current salary. Source: Chief Investment Office and Bank of America Retirement & Personal Wealth Solutions, "Financial Wellness: Helping improve the financial lives of your employees," 2023.
What is the magic number for retirement age? ›
Rule of 80 is when your age plus employment service totals 80. It used to be called Magic 80.
