Americans Believe They Need Over $1M to Comfortably Retire

According to a new study from Northwestern Mutual, Americans believe they will need over $1 million to retire comfortably.

The 2024 Northwestern Mutual Planning & Progress study found a large gap between what some people have set aside for retirement and what they think they will need. On average, according to the study, most Americans have less than $89,000 saved.

“People’s ‘magic number’ to retire comfortably has exploded to an all-time high, and the gap between their goals and progress has never been wider,” said Aditi Javeri Gokhale, chief strategy officer, head of institutional investments, and president of retail investments at Northwestern Mutual.

“Inflation is expanding our expectations for retirement savings and is putting the pressure on the ability to plan and stay disciplined,” Gokhale continued. However, the study shows ways to try and achieve what seems to be an impossible sum of money.

When looking across different generations, both Gen Z and Millennials expect they may need more than the national average to retire comfortably, which is $1.46 million, according to Northwestern Mutual. Gen Z estimated $1.63 million should be enough for retirement, while Millennials think they’ll need $1.65 million to retire comfortably. 

Gen X, or those born between 1965 and 1980, estimated needing $1.56 million, and Boomers, born between 1946 and 1964, believe they’ll need $990,000. People with more than $1 million in investable assets said they’ll need nearly $4 million to retire comfortably, according to the study. 

Saving consistently is an essential element of preparing for retirement, Northwestern Mutual explained. The company suggested that to begin saving at any age, a good idea is to open a 401(k) or IRA to start. These accounts allow you to save for retirement without paying taxes on the money you save until you get to retirement.

Roth accounts may also be helpful. These are taxed differently, meaning you’ll pay tax today on funds you contribute but generally will not pay taxes on the contributions again.