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.
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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.
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FAQs
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.
What is the magic number to retire comfortably? ›
And this estimate is no different. Northwestern Mutual surveyed 4,588 adults and found: The new “magic” number for a comfortable retirement is $1.46 million. It's up 15% from last year's $1.27 million number and is also an eye-popping 53% higher than the 2020 estimate.
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.
What is the new magic number for retirement Wall Street Journal? ›
The new magic number for retirement is $1.46 million. Wall Street Journal personal finance reporter, Anne Tergesen, joins me. Anne, $1.46 million needed to retire, how did that number come about?
How many Americans have $1,000,000 in retirement savings? ›
According to the Federal Reserve's latest Survey of Consumer Finances, only about 10% of American retirees have managed to save $1 million or more. This leaves a significant 90% who fall short of this milestone.
Is $400,000 enough to retire at 62? ›
Retiring at 62 on $400,000
This plan can work … sort of. At age 62, with $400,000 in a 401(k) account, you can generate a livable income depending on how you structure your portfolio and where you choose to live. Livable does not mean comfortable, however.
Is $500,000 enough to retire at 67? ›
Half a million dollars might sound like a lot of money, but if you're approaching retirement, is it enough? If you have $500,000 in a pre-tax IRA and expect $2,000 per month from Social Security, you may have enough money to retire at age 67.
Can I retire at 55 with $1 million? ›
It's definitely possible, but there are several factors to consider—including cost of living, the taxes you'll owe on your withdrawals, and how you want to live in retirement—when thinking about how much money you'll need to retire in the future.
How many Americans retire with no money? ›
Learn more. WASHINGTON—A new AARP survey finds that 20% of adults ages 50+ have no retirement savings, and more than half (61%) are worried they will not have enough money to support them in retirement.
What is the average amount to retire in the US? ›
The average retirement savings for all families is $333,940, according to the 2022 Survey of Consumer Finances. The median retirement savings for all families is $87,000.
The old system is broken. People are living much longer and they need—and want—to work later in life to make the numbers add up. Besides, you can only spend so much time on the golf course.
Is $20 million enough to retire? ›
Imagine you're retiring at 50 years old with $20 million in the bank. Even if the money generated little interest or even none at all, you could afford to withdraw $500,000 per year for the next 40 decades. That means you could spend nearly $42,000 each month for 40 years if you live to 90.
Is 7 million enough to retire at 55? ›
Retiring with $7 million means you can bid adieu to financial anxiety. You've amassed a significant nest egg that, when managed prudently, can provide you with a stable and worry-free income for the rest of your life. Basic living expenses like housing, healthcare and groceries will no longer keep you up at night.
How much does the average 70 year old have in savings? ›
The Federal Reserve also measures median and mean (average) savings across other types of financial assets. According to the data, the average 70-year-old has approximately: $60,000 in transaction accounts (including checking and savings) $127,000 in certificate of deposit (CD) accounts.
Can I live off the interest of 1 million dollars? ›
Once you have $1 million in assets, you can look seriously at living entirely off the returns of a portfolio. After all, the S&P 500 alone averages 10% returns per year. Setting aside taxes and down-year investment portfolio management, a $1 million index fund could provide $100,000 annually.
How far will $1m go in retirement? ›
For retirees in California, the annual cost of living expenses would be $72,319.57, meaning a $1 million retirement fund would last for about 14 years. Retirement can often last 25 years or more, according to Fidelity.
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.
What is a comfortable amount of money to retire with? ›
By age 40, you should have accumulated three times your current income for retirement. By retirement age, it should be 10 to 12 times your income at that time to be reasonably confident that you'll have enough funds. Seamless transition — roughly 80% of your pre-retirement income.
Should I retire at 62 67 or 70? ›
A worker can choose to retire as early as age 62, but doing so may result in a reduction of as much as 30 percent. Starting to receive benefits after normal retirement age may result in larger benefits. With delayed retirement credits, a person can receive his or her largest benefit by retiring at age 70.
How far will $1,000,000 last in retirement? ›
Around the U.S., a $1 million nest egg can cover an average of 18.9 years worth of living expenses, GoBankingRates found. But where you retire can have a profound impact on how far your money goes, ranging from as a little as 10 years in Hawaii to more than than 20 years in more than a dozen states.
