The ‘Magic Number’ Americans Say You Need To Retire in 2025 Is Less Than Last Year
For a long time, $1 million was considered the “magic number” for your retirement nest egg, but as costs have increased, that number has too. However, the average American now believes they need less money for a comfortable retirement than they did a year ago.
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According to the latest Northwestern Mutual Planning & Progress Study, U.S. adults believe they need $1.26 million saved for a comfortable retirement. In 2024, the average American believed they needed $1.46 million.
Here’s a closer look at why Americans believe $1.26 million is the sweet spot, why expectations have changed over the past year and how you can successfully build a seven-figure nest egg.
Although Americans have tempered expectations compared to 2024, $1.26 million is still a sizable nest egg. For some people, this may be an accurate estimate of what their savings goal should be, but some will need less — and some will need more.
“Whether that amount is good or bad depends on the individual and their circumstances,” said Creg Canalizo, a financial advisor at Northwestern Mutual based in Irving, Texas. “The amount you might need is heavily influenced by the lifestyle you envision once retired. Those planning to travel extensively or engage in expensive hobbies may need more than $1.26 million, while others with modest expectations might require less.”
Canalizo noted that many Americans will realistically need $1 million-plus to fund a comfortable retirement.
“With life expectancy increasing, retirees may need to fund up to 30 years of retirement — maybe even more,” he said. “And with rising healthcare costs, it’s essential to consider these expenses when estimating the necessary retirement savings.”
However, everyone’s needs will be different.
“While $1.26 million might be a solid benchmark, personal planning should account for individual goals, health considerations and other income sources,” Canalizo said. “If Social Security benefits come into play, it can impact how much individuals need to save.”
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Shifts in economic and personal circumstances may explain why Americans now believe you need less money saved to retire compared to a year ago.
“Volatility in the markets could lead to anxiety about retirement savings, prompting people to reassess their needs based on lower returns or economic uncertainty,” Canalizo said. “Also, inflation can make people feel they need less saved if they expect a lower standard of living or if they’re adjusting their retirement timelines. People may now prioritize experiences over material wealth, leading them to believe they need less money saved.”
