The New Retirement Number: Why $1 Million Might Not Be Enough for Many Americans

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The mythical $1 million figure has long been seen by Americans as the gold standard when it comes to retirement savings. For most Americans, that lofty seven-digit number has been seen as a guarantee of financial security, allowing all but the most extravagant retirees the ability to comfortably enjoy their golden years. But with costs rocketing higher coming out of the pandemic — and continuing to rise today — that $1 million just won’t cut it in an American culture characterized by consumer spending and higher-quality lifestyles.

But part of the beauty of America is that each person has their own unique idea as to how they should live their lives. Depending on where you live and the lifestyle you choose, $1 million may be more than enough to fund a long and prosperous retirement, or it might just barely cover your basics. 

Here’s a look at how the retirement landscape has changed in recent years and how you can build a nest egg that’s in line with your needs.

How Can $1 Million Possibly Not Be Enough?

Obviously, if your vision of retirement is sailing around the world in a first-class cabin or island-hopping in a private jet, $1 million isn’t going to last you very long. But even if you have a more modest view of how retirement should be, $1 million may still not quite see you to the end, and here’s why.

The Cost-of-Living Has Risen Tremendously Since the Pandemic

According to the Bureau of Labor Statistics, prices for many goods and services rose dramatically from 2020 through 2024, with more increases in 2025. Here are just some of the categories that have soared in cost since the pandemic:

• Food: Up 23.6%
• Transportation: Up 34.4%
• Housing: 23.0%

As these are some of the core expense categories for Americans, it’s clear that what may have funded a comfortable pre-pandemic retirement might come up short today. 

If a retiree plans to withdraw a traditional 4% of a $1 million portfolio, that’s $40,000 a year — before taxes. In many U.S. cities, that won’t cover basic living expenses, let alone the lifestyle expectations many retirees now aim for.

Americans Are Living Longer Than They Used To

If you retire at age 65, Social Security actuarial tables suggest you’ll live between about 17 and 20 years, with odds tied to gender. That means many 65-year-olds will live 25 to 30 years, or perhaps even longer. Depending on your own physical health and how longevity runs in your family, you might have to plan on your nest egg lasting much longer than you imagine. The last thing you want to do is start running out of money at age 80 when you still have 10 years left to live. If you want a $1 million nest egg to last at least 30 years, you might not be able to live the lavish lifestyle you’re envisioning, especially if you plan to leave money to your heirs. 

America Is a Consumer Culture

Let’s face it — Americans like to spend money. According to data from the Federal Reserve, as of Q2 2025, consumer spending comprises a whopping 68.2% share of the entire American economy. Many seniors don’t want to simply ride off into the sunset — they want a retirement filled with dining out, travel and hobbies. In other words, they want a rich, fulfilled life, not mere survival. Within these parameters, $1 million might not last as long as you might expect.

What Does the Math Say?

If a retiree follows the common recommendation to withdraw 4% of their retirement portfolio annually, that only provides $40,000 of income. Adding in the average Social Security payout for retired workers of $24,100 annually means an average worker with a $1 million nest egg draws about $64,000 per year, or $5,333 per month. In most cases, that’s enough to live off, but it might be a far cry from the lifestyle that many retirees think that $1 million can buy.

Tips To Build Your Nest Egg

Even if you think you can enjoy retirement with less than $1 million, there’s no such thing as an “overfunded nest egg.” If you can manage to build a seven-figure account balance, then you won’t have to worry about trying to get by on less. Here are some proactive steps you can take to improve your chances of reaching that $1 million target — or even more: 

• Increase your contributions as you earn more: Most Americans reach their peak earnings years in their 50s. This is the time to boost your savings and investments as much as you can. Rather than increasing your spending during this decade, increase your savings rate instead as your income rises.
• Take advantage of catch-up contributions: Once you reach age 50, the IRS allows you to put additional money into your retirement plans through so-called “catch-up” contributions. For tax year 2025, you can contribute an additional $1,000 to an IRA, for a total of $8,000. But the real perk comes if you have a 401(k). Catch-up contributions in a 401(k) amount to $7,500, bringing the annual maximum contribution limit to a whopping $31,000. 
• Pay off your high-interest debt: Credit card debt in particular can spiral rapidly out of control, particularly if you’re living off a fixed income. Take the time to knock out all high-interest debt before you retire. 
• Work longer: The longer you work, the more income you generate. But beyond that, every year that you work reduces the number of years of retirement you have to fund. This can greatly extend the longevity of your nest egg. 
• Continue investing for growth: Many retirees get out of stocks and other growth investments as soon as they retire. This can be a mistake. If you’re going to spend 20-30 years in retirement, owning growth investments is a good way to make sure you don’t outlive your money. 

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