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 savings is at an all-time high — $1.46 million to retire comfortably, according to responses from Northwestern Mutual's 2024 Planning & Progress Study.
Why is $1.46 million the magic number for retirement? ›
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.
How much money Americans think they need to retire comfortably? ›
The American dream retirement nest egg: $1.46 million
According to the Northwestern Mutual 2024 Planning & Progress Study, Americans believe that they need an average of $1.46 million to retire comfortably. And keep in mind, that's an average across all age groups.
What is a comfortable amount to retire with? ›
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.
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.
How much money do most Americans retire with? ›
Here's how much the average American has in retirement savings by age
| Age Range | Median Retirement Savings |
|---|
| 45-54 | $115,000 |
| 55-64 | $185,000 |
| 65-74 | $200,000 |
| 75 or older | $130,000 |
2 more rowsMay 5, 2024
If you purchase your $1,000,000 annuity between the ages of 60 – 70 and start taking payments immediately then you can expect to receive between $4,500 and $6,500 per month for the rest of your life or for the time period of your annuity payout.
How much to retire in 2024? ›
News Releases
| 2024 | 2023 |
|---|
| Amount expected to need to retire comfortably | $1.46M | $1.27M |
Apr 2, 2024
How much do I need to retire? 7 X your household income. With saving milestones to get you there.
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.
What is a realistic amount of money for retirement? ›
The 80% rule: Some experts cite the "80 percent rule" of retirement planning, which states that you should plan to live on 80 percent of your pre-retirement income to maintain a similar lifestyle. So if you earn $100,000 per year, you should aim for a retirement income in the range of $80,000 per year.
What is the average Social Security check? ›
Social Security offers a monthly benefit check to many kinds of recipients. As of December 2023, the average check is $1,767.03, according to the Social Security Administration – but that amount can differ drastically depending on the type of recipient. In fact, retirees typically make more than the overall average.
How many people have $1,000,000 in retirement savings? ›
In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved.
How much does the average retired person live on per month? ›
Retirement Income Varies Widely By State
| State | Average Retirement Income |
|---|
| California | $34,737 |
| Colorado | $32,379 |
| Connecticut | $32,052 |
| Delaware | $31,283 |
47 more rowsOct 30, 2023
The average estimate, $1.46 million, is a 15% increase from last year. It's also a huge jump from 2020, when people guessed they'd need $951,000 to retire.
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.
What is the 33x rule for retirement? ›
For example, if you plan on 3% SWR, your nest egg will need to be 33x your annual expenses to retire. But you're much less likely to deplete your portfolio than 4%. Your time to retirement, then, is how long it will take for you to build your nest egg to sufficient size.
What is the 10x rule for retirement? ›
Fidelity's guideline: Aim to save at least 1x your salary by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67. Factors that will impact your personal savings goal include the age you plan to retire and the lifestyle you hope to have in retirement.
