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
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? ›
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.
Do Americans think they need $1.46 million to retire comfortably? ›
When it comes to retirement, Americans have a new number in mind — $1.46 million — for how much they think they will need to live comfortably, according to new research from Northwestern Mutual.
How much money do you think you ll actually need to retire comfortably? ›
Some strategies call for having 10 to 12 times your final working year's salary or specific multiples of your annual income that increase as you age. Consider when you want to retire, goals, annual salary, expected annual raises, inflation, investment portfolio performance and potential healthcare expenses.
What is a comfortable number to retire with? ›
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.
What is the golden number for retirement? ›
California adults surveyed in the study named a slightly higher “magic” number, believing they will need $1.47 million to retire comfortably.
How much does the average American have at retirement? ›
The average retirement savings for all families is $333,940, according to the 2022 Survey of Consumer Finances.
How much does a married couple need to retire at 60? ›
It's recommended that most couples save at least seven to eight times their combined annual income to retire comfortably. This number may seem daunting until you remember that savings compound over time.
Can you retire comfortably with $3,000,000? ›
Summary. $3 million should be more than enough to fund your retirement, even if you choose to retire early. A number of factors are at play when determining how long $3 million will last, including your investment strategy and retirement lifestyle.
Is $4,000,000 enough to retire? ›
Looking to retire on $4 million? If you leave work at 61, the average retirement age as of the latest Gallup data, you'll have more than enough to see you through to a life expectancy of 90 or even 100. Across 29 years, $4 million could equate to a generous $11,494 a month.
In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved.
What is the average 401k balance for a 65 year old? ›
What is a good monthly retirement income? ›
Many retirees fall far short of that amount, but their savings may be supplemented with other forms of income. According to data from the BLS, average 2022 incomes after taxes were as follows for older households: 65-74 years: $63,187 per year or $5,266 per month. 75 and older: $47,928 per year or $3,994 per month.
How long will $400,000 last in retirement? ›
With $400,000, if you buy an annuity at age 62 and then retire, you might expect monthly payments of around $2,400 for the rest of your life. This comes to about $28,800 per year in guaranteed income according to one estimate.
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.
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.
Why isn't 65 the magic number for retirement anymore? ›
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.
What is a good number to save for retirement? ›
There is a general rule of thumb: When saving for retirement, most financial experts recommend an annual retirement savings goal of 10% to 15% of your pre-tax income.
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.
