Retirement Costs Study: 49% of Americans Say They Think $1 Million Is Not Enough To Retire
Written by
Crystal Mayer
Edited by
Ashleigh Ray
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Undoubtedly, the cost of retirement is going up in the United States, but how much do you really need to live comfortably once you call it quits on your career? According to our survey of over 1,000 adults, nearly half of Americans said $1 million is not enough to retire.
We asked experts to weigh in on whether these people were right or if they missed the mark. Here is how much you might need to feel financially secure in retirement.
How Much Americans Think Is Needed To Retire Comfortably
When asked, slightly less than 25% of respondents said they believed they could retire comfortably with savings less than $500,000. Additionally, just 26% of adults said that they would need somewhere between $500,00 and $1,000,000 to feel set in retirement. Take a look.
Do You Need at Least $1 Million To Retire Comfortably?
Nearly half (49%) of people surveyed felt that they would need $1,000,000 or more in savings to retire comfortably. Furthermore, an astounding 19% of respondents believe that they will never be able to afford to retire comfortably in America. In fact, 10% of people said they believed it would take at least $2 million to feel financially secure throughout retirement.
David Bakke, financial expert at DollarSanity, said, “The answer to the question if $1 million is enough to retire is ‘it depends.’ How do you envision your retirement? If it’s filled with extravagant travel, a new home, and other major purchases it certainly could be. It all depends upon what you want to get out of retirement.”
He added, “My ultimate recommendation — decide for yourself. Maybe you do, maybe you don’t. Just understand that as long as you’re in control of your finances and making smart decisions, you’ll be in the best possible position to see if $1 million is enough or not.”
Do Men or Women Think You Need More in Savings To Retire?
Men are slightly more optimistic that they will be able to retire comfortably in the future. Over 23% of women responded they did not believe they would ever be able to afford to retire comfortably, compared to only 14% of men.
Men were also more likely to believe that you would need between $500,00 and $1 million in savings to retire. Nearly 28% of men felt this would be a sufficient amount in savings as opposed to 25% of women.
So, Is $1 Million in Savings Enough?
Brandon Galici, a CFP who owns his own firm, Galici Financial, said determining if $1 million is enough to retire on comes down to three things: your annual spending, your guaranteed income, and your net worth.
He explained, “The best way to determine if $1 million will be sufficient is to calculate your ‘Total Term’ ratio. This is your total net worth divided by your annual spending. It shows you how many years you could live on your assets based on your current spending without factoring in growth, taxes, inflation, etc. A ratio of around 30 is generally considered enough for retirement in your 60s.”
He continued, “If you have a $1 million net worth and spend $50,000 annually, your total term would be 20. Likely not yet enough to fully retire. For a more realistic number in retirement though, you want to factor in your guaranteed income sources, like social security or a pension. Using the same example, let’s say you expect $25,000 per year of Social Security payments. This effectively reduces your spending need from $50,000 to $25,000. Your new total term ratio is now 40 ($1M divided by $25K). You could likely retire at this point!”
Galici concluded, “Ultimately, your spending and guaranteed income sources in relation to your net worth have the biggest impact on when you can retire. The higher your spending is (after factoring in your guaranteed income), the more money you will need to sustain a comfortable retirement.”
Methodology: GOBankingRates surveyed 1,005 Americans aged 18 and older from across the country between January 23 and January 26, 2024, asking six different questions: (1) What is more important to you in a job/career?; (2) What is the minimum annual salary that would make you feel happy?; (3) How much do you believe you will need in savings in order to retire comfortably?; (4) How much do you currently have saved for retirement?; (5) Do you think you will be able and prepared to retire at 65?; and (6) What percentage of your salary do you put towards a retirement plan such as a 401K?. GOBankingRates used PureSpectrum’s survey platform to conduct the poll.
More From GOBankingRates
