Retirement: Here’s the Number to Keep in Mind: $1.46 Million

Northwestern Mutual study on what Americans believe they will need to retire comfortably

Americans’ “magic number” for retirement is surging to an all-time high — rising much faster than the rate of inflation while swelling more than 50% since the onset of the pandemic.

These are the latest top-level findings from Northwestern Mutual’s 2024 Planning & Progress Study, the company’s proprietary research series that explores Americans’ attitudes, behaviors and perspectives across a broad set of issues impacting their long-term financial security.

U.S. adults believe they will need $1.46 million to retire comfortably, a 15% increase over the $1.27 million reported last year, far outpacing today’s inflation rate which currently hovers between 2% and 3%. Over a five-year span, people’s ‘magic number’ has jumped a whopping 53% from the $951,000 target Americans reported in 2020.

By generation, both Gen Z and Millennials expect to need more than $1.6 million to retire comfortably. High-net-worth individuals — people with more than $1 million in investable assets — say they’ll need nearly $4 million.

Meanwhile, the average amount that U.S. adults have saved for retirement dropped modestly from $89,300 in 2023 to $88,400 today, but is more than $10,000 off its five-year peak of $98,800 in 2021.

“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, chief strategy officer, president of retail investments and head of institutional investments at Northwestern Mutual. “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. Inflation is expanding our expectations for retirement savings, and putting the pressure on to plan and stay disciplined. Making a ‘magic number’ appear isn’t about waving a wand; it’s about using time-tested techniques and learning from a skilled advisor.”

Across all segments, there are large gaps between what people think they’ll need to retire and what they’ve saved to date.

The ‘Silver Tsunami’ is here

In 2024, more than four million Americans will turn 65. That’s an average of 11,000 Americans per day, and it will continue through 2027. It’s the largest surge of Americans hitting the traditional retirement age in history.

The 2024 Planning & Progress Study found that among generations closest to retirement, just half of boomers (49%) and Gen X (48%) believe they will be financially prepared when the time comes.

On average, Gen X believes there is a 42% chance they could outlive their savings, while boomers put the probability at 37%.

Across both generations, more than a third (37% and 38%, respectively) have not taken any steps to address the possibility of outliving their savings.

“The ‘Silver Tsunami’ is here,” said Gokhale. “While younger generations are focused on building wealth and protecting what they’ve already built, Gen X and boomers have an additional important task: paying themselves first in retirement. Where they have savings can be just as important as how much they have saved. Done well, a comprehensive financial plan can preserve thousands of hard-earned dollars to fund these golden years. For anyone who is not sure how to streamline and preserve every penny, an expert financial advisor can be a great resource.”

When digging into some of the most pressing challenges associated with retirement planning, the research shows that boomers and Gen X don’t have markedly strong confidence in their preparedness.