The New 'Magic Number' for Retirement Is $1 Million More Than What the Average American Has Saved The gap between retirement goals and progress has never been bigger.
By Sherin Shibu
Key Takeaways
- The magic number, or number that Americans think they need to save to retire comfortably, is now $1.46 million.
- That's a 15% jump from last year.
- The numbers varied by generation: Boomers believe they need to save less than a million dollars ($990,000) to retire, while Gen Z believes that they'll need to save around $1.63 million.
The magic number for retirement, the number that U.S. adults believe they'll need to save to retire comfortably, has skyrocketed to an all-time high of $1.46 million, according to a new study. That's over half a million dollars more than the $951,000 magic number target reported five years ago.
Northwestern Mutual released its 2024 Planning & Progress Study on Tuesday with some key findings on how Americans view retirement — and how that compares to what they have saved.
The study showed that the ideal retirement savings number jumped 15% from 2023 to 2024, outpacing the rate of inflation and widening the gap between goals and progress.
Related: Can You Afford to Retire? Here's How Much Americans Spend Daily in Retirement
The average amount that U.S. adults have saved for retirement is now $88,400, which is $10,000 less than the average in 2021. The current gap between retirement goals and average savings is $1.37 million.
"Anxiety about retirement is sky-high," Teresa Ghilarducci, an economist at the New School for Social Research, told the Wall Street Journal. Ghilarducci identified the costs of healthcare and long-term care as potential financial stressors.
The magic number for retirement varies between generations — Gen Z believes they'll need $1.63 million to retire comfortably, while millennials and Gen X aim for $1.65 million and $1.56 million, respectively.
In the report, Boomers said they need to save less than a million dollars ($990,000) to retire.
High-net-worth individuals with more than $1 million in investable assets have a retirement goal of almost $3.93 million. This group has also more saved for retirement than anyone else, at $172,100 saved on average — but they also have the biggest gap between their high retirement goals and their current savings.
The study also noted that Gen Z is starting to save at age 22 on average — 15 years earlier than when Boomers started saving and earlier than millennials and Gen X, who began at 27 and 31 years old, respectively.
Gen Z also hopes to retire earlier than older generations, at 60 instead of 65 years of age or older. When compared to responses from older generations, they also believed they'd likely live to be 100.
BlackRock CEO Larry Fink told investors in an annual letter last month that politicians and corporate leaders should come together to tackle the retirement crisis.
"As a society, we focus a tremendous amount of energy on helping people live longer lives," he wrote. "But not even a fraction of that effort is spent helping people afford those extra years."
A 2023 survey from the Employee Benefit Research Institute (EBRI) showed that only 35% of who people retired earlier than planned said that they did so because they could afford it.
