"Magic" Numbers

New research has found a new “magic” retirement savings number.

We say “magic” because if you put 10 people in a room, you’ll get 10 different opinions about how much you should save for retirement.

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.¹

It’s up 15% from last year’s $1.27 million number and is also an eye-popping 53% higher than the 2020 estimate.²

Broken down by generation, the numbers get even bigger.

Gen Z and Millennials expect to need around $1.6 million to comfortably retire.¹

And folks with over $1 million saved believe they’ll need nearly $4 million to be comfortable.

Does the average American actually need $1.46 million to retire comfortably?

Probably not.

Another “magic” number from Fidelity suggests Americans should have 10x their income saved by age 67.³

If we 10x the median household income of $74,580, we get $745,800.⁴

That’s about half of the first “magic” number.

For some Americans, $750k will be enough to retire on.

For others, it won’t be nearly enough to support the lifestyle they want.

Planning for retirement isn’t about “magic” numbers.

When we consider that the average retirement savings hovers around $88,000, the gap between desire and reality has never been greater.¹

Most people don’t really know how much money they will need in retirement, and can wildly overestimate it.

This is where the value of working with an advisor comes into play.

When we engage with folks the first question we ask is “what is your why?”.

This simple question then leads into discovering what people truly value about money, and the goals that they are trying to accomplish.

With that question answered, you can better understand how much money you realistically need, and the how to get there with what you have today.

Sources:

1. https://news.northwesternmutual.com/2024-04-02-Americans-Believe-They-Will-Need-1-46-Million-to-Retire-Comfortably-According-to-Northwestern-Mutual-2024-Planning-Progress-Study

2. https://news.northwesternmutual.com/2023-06-22-Americans-Believe-They-Will-Need-1-27-Million-to-Retire-Comfortably,-According-to-Northwestern-Mutual-Planning-Progress-Study

3. https://www.fidelity.com/viewpoints/retirement/how-much-do-i-need-to-retire

4. https://www.census.gov/library/publications/2023/demo/p60-279.html

5. https://www.cnbc.com/2024/04/10/cpi-inflation-march-2024-consumer-prices-rose-3point5percent-from-a-year-ago-in-march.html

Chart source:

https://news.northwesternmutual.com/2024-04-02-Americans-Believe-They-Will-Need-1-46-Million-to-Retire-Comfortably-According-to-Northwestern-Mutual-2024-Planning-Progress-Study