Why America’s ‘Magic Number’ For Retirement Dropped By $200K In 2025
Written by
Sarah Li Cain
Edited by
Amen Oyiboke
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How much do you think you need to have to retire comfortably? For the average American, that number has dropped. According to a Northern Mutual Survey, this “magic number” that will set you up for a comfortable retirement has dropped around $200,000.
Instead of the expected $1.46 million, respondents believed they needed in 2024, that number now sits at $1.26 million in 2025.
So why the drop? Here are a few reasons why there is a drop in how much a person needs to retire comfortably.
Inflation May Play a Role
John Roberts, chief field officer at Northwestern Mutual, said in a statement that lower levels of inflation could have to do with it.
He said that while inflation is “still people’s number one concern, [it] isn’t as elevated as it was in recent years. Inflation is often described as ‘sticky’ because it can take a long time for people’s attitudes about it to change. The inflation rate retreated from 6% in 2023 to about 3% in 2024, and now, in 2025, Americans are adjusting their perceptions about their future financial needs.”
Even if the “magic number” went down, this number is still high (and maybe out of reach) for many folks.
According to the same survey, 46% believe that they won’t have enough set aside for retirement. Only 53% of Gen X’ers have around three times or less of their current annual income saved. Younger generations are faring slightly better, with 65% of Millennials and 58% Gen Z with similar savings.
The survey also found that respondents believe they’ll outlive their savings.
How Much You Need To Save
Time is on your side, the younger you are. In other words, you’ll need to invest less upfront the more time you have to invest for retirement.
Using this year’s “magic” number of $1.26 million and assuming you’ll want to retire by 65 years old, the amount you need to set aside each month grows as you get older.
Let’s assume a 7% return for your investments, you set aside funds regularly, and you don’t borrow from your retirement accounts.
If you’re now 20 years old, you only need to invest $330 per month. That number more than doubles for someone at 30 — $695 each month. For someone at age 40, that number goes up to $1,547 per month, and $3,958 for a 50-year-old.
This “Magic” Number May Not Be Accurate
Remember, this is the number that survey respondents believe they’ll need to live a comfortable retirement. Your “magic” number could be higher or lower, depending on factors like your expected expenses you have during retirement.
The more expenses you have, the higher your number will be. Or, if you anticipate that you’ll have increased health concerns (like if your family medical history shows higher risks for certain diseases), you may want to set aside more for retirement as well.
The key is to look at what your current expenses are and what you anticipate spending in retirement to come up with your number. Use that as a benchmark to determine how much you still need to save for retirement.
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Sources:
- Northern Mutual Survey, “Americans Believe They Will Need $1.26 Million to Retire Comfortably According to Northwestern Mutual 2025 Planning & Progress Study”
