In Less Than a Decade, You Should Have This Much Saved for Retirement

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Saving for retirement has been difficult for many Americans lately, due to a confluence of drivers. Inflation, combined with soaring interest rates, is leaving little left to put aside for later years.

Against that backdrop, Americans’ “magic number” to retire — the amount of money needed to do so — is rising faster than inflation. American adults believe they will need $1.46 million to retire comfortably, according to Northwestern Mutual’s 2024 Planning & Progress Study. That figure is up from $1.27 million reported last year.

And as Northwestern noted, this number increased 15% in a year, while retirement savings dropped to $88,000 from $89,300. This represents a startling $1.37 million gap between savings and the magic number.

And when it comes to high-net worth individuals — those with more than $1 million in assets — their magic number jumps to $4 million.

Magic Number For Retirement a ‘Moving Target’

Yet, some experts said that “the number” is a moving target.

“But that is not necessarily a bad thing,” said Bobbi Rebell, CFP and founder of Financial Wellness Strategies. “The truth is that our needs, wants and realistic lifestyle aspirations are always changing. Our ability to adapt and be resilient is a good thing.”

Rebell noted that the amount needed to retire always seems to be increasing, which can be frustrating.

“So the best advice is to not get so frustrated that you give up, no matter what generation or life stage you are in,” she said.

How Much Should You Have Saved in a Decade?

The study also found that boomers have, on average, $120,300 in retirement savings. However, their retirement goal is to have $990,000 in savings, representing a $870,000 gap.

Meanwhile, millennials and members of Gen Z currently hold $62,600 and $22,800 in savings, respectively. This is a far cry from their respective $1.65 million and $1.46 million magic numbers.

Against that backdrop, Jay Zigmont — PhD, CFP and founder of Childfree Wealth — said your retirement number should match your situation and your expenses.

“For a rough estimate, you can multiply your current expenses by 25,” said Zigmont.

For example, he said, if you have $40,000 of expenses each year, you need $1 million in order to retire. This is based on the safe withdrawal rate of 4% per annum, which is the amount you can pull out each year (over 30 years) and maintain a low likelihood of running out of money. 

“Your age or generation is one of the least important factors in determining how much you need in retirement,” he said. “You can retire when you have enough money to live off of, or in other words, once you’ve reached financial independence.”

Zigmont said that one of the study’s findings — that millionaires thought they needed more money to retire than those of more modest means — is not surprising, as it is very common that once you hit a million dollars in net worth, your goalposts start to shift.

Different Views of Retirement and Different Financial Challenges

Trying to assess how much you will need in a decade also depends on several factors.

First, “retirement” can mean different things for different generations.

“For a baby boomer, for instance, it may be the traditional definition, where you aren’t working (for pay) at all,” said consumer finance expert Kyle Enright, president of Achieve Lending. “You may be traveling, spending time with grandchildren, volunteering or learning a new language.”

Meanwhile, for a Gen Zer, maybe “retirement” just means the option to do what you want, when you want. For a millennial, maybe it’s retiring from a “traditional” job and turning a side gig into a bigger money-making effort, he added.

Enright argued that beyond incorporating the goals you’ve set, your calculations will depend on a slew of other factors, such as where and how you live.

“A Gen Zer who lives in San Francisco may have different thoughts, plans and financial needs than a boomer ready to retire in a small town in the south,” he added.

To get a better idea of your needs, he suggested using online retirement planning calculators and plugging in different variables, so you can see the amount of cash you’ll require — and what you’ll need to save in order to get there.

“Be aware that most people find that it will take much more savings to retire — whatever their definition is — than they thought,” he said. “Start thinking and planning as early as possible, be realistic and be prepared to modify your plans.”

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