A "Magic" Retirement Number??
New research has found a new "magic" retirement savings number.
We say “magic” because if you put 10 people in a room, you’ll get 10 different opinions about how much you should save for retirement.
And this estimate is no different.
Northwestern Mutual surveyed 4,588 adults and found:
The new “magic” number for a comfortable retirement is $1.46 million.1
It’s up 15% from last year’s $1.27 million number and is also an eye-popping 53% higher than the 2020 estimate.2
Broken down by generation, the numbers get even bigger.
Gen Z and Millennials expect to need around $1.6 million to comfortably retire.1
And folks with over $1 million saved believe they’ll need nearly $4 million to be comfortable.
Does the average American actually need $1.46 million to retire comfortably?
That depends on how they would define the word "comfortable".
Another “magic” number from Fidelity suggests Americans should have 10x their income saved by age 67.3
If we 10x the median household income of $74,580, we get $745,800.4
That’s about half of the first “magic” number.
For some Americans, $750k will be enough to retire on.
For others, it won't be nearly enough to support the lifestyle they want.
Planning for retirement isn’t about “magic” numbers.
When we consider that the average retirement savings hovers around $88,000, the gap between desire and reality has never been greater.1
Most people don’t really know how much money they will need in retirement and can wildly overestimate it, or worse, underestimate it.
As much as humans like to look for simple answers and rules to follow, turning a portfolio into retirement income is complex.
Here's what we know...
The best way to determine YOUR retirement number is to do a complete Retirement Spending Plan that includes the following items...
- Your desired retirement age
- Your Desired Retirement Spending Goal
- Your Assets that are Available to Fund These Goals
- Inflation, Taxes, Market Risks, Healthcare spending, and many other factors
If you'd like to have your personal retirement spending plan reviewed (for free), feel free to contact us and schedule a meeting. We're happy to help.
Thanks for reading - Have a great week!
Sources:
3. https://www.fidelity.com/viewpoints/retirement/how-much-do-i-need-to-retire
4. https://www.census.gov/library/publications/2023/demo/p60-279.html
Chart source: https://news.northwesternmutual.com/2024-04-02-Americans-Believe-They-Will-Need-1-46-Million-to-Retire-Comfortably-According-to-Northwestern-Mutual-2024-Planning-Progress-Study