The 'Magic Number' People Think They Need To Retire Vs. How Much The Average Worker Actually Has Saved
DimaBerlin | ShutterstockOver the last several years, the prospect of retirement has become more of a luxury than a given for many Americans. It's the reason why many baby boomers and Gen Xers have reckoned with the fact that they probably won't be able to stop working at the age they expected to.
According to Northwestern Mutual's 2026 Planning & Progress Study, the company's research team discovered the amount most Americans think they need to have in the bank in order to comfortably retire. Not only is it a bit out of reach for a good number of people, but the actual amount that Americans are saving up for retirement doesn't even come close to the findings from the study.
The 'magic number' people think they need to retire is over $1 million.
Findings from Northwestern Mutual's study showed that the "magic number" to retire without facing constant worries now stands at $1.46 million. This is a $200,000 increase over statistics from 2025. Additionally, 46% of Americans don't think they'll be ready to retire when the time comes, and 48% think there's a good chance their money will run out before the end of their life.
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Northwestern Mutual's chief field officer, John Roberts, explained why this number is so high. "The new 'magic number' reflects a convergence of factors — from persistent inflation and longer life expectancies to uncertainty about the future of Social Security," he said. "Retirement is increasingly complex, and Americans are responding by setting higher expectations for what they'll need."
Experts at Northwestern Mutual suggest that people looking to retire save an amount equal to 80% of their income, although they acknowledged there's no real "magic number" that you need to save for retirement, as it's different for each person.
The amount the average worker has saved up doesn't come close to this 'magic number' at all.
A study by the National Institute on Retirement Security (NIRS) found that most workers only have $955 saved for retirement through plans like a 401(k) account. Most people fall well short of the recommended savings targets for their age group.
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In a Fox Business report on the study, "positive retirement plan wealth" was defined as having "at least $1 saved in a defined contribution (DC) plan." People in this situation usually had closer to $40,000 saved, which is an encouraging increase, but still nowhere close to $1.46 million.
Data shows that the average annual income for an American household is approximately $66,622. So, if all someone had saved for retirement was $40,000, they might not even make it through a whole year.
Age-based retirement savings plans are also unattainable for many.
Fidelity Investments has one of the most well-known age-based retirement savings plans. Since the concept of saving for retirement seems pretty abstract, especially when you're younger, it can be helpful to work with guidelines that say you should have a certain amount of money saved by a certain age.
Fidelity acknowledged that the goals they created were "aspirational," but to most, they'll probably seem more like impossible. They suggested that workers begin saving 15% of their income each year by the time they turn 25, and to have at least one chunk of money equal to their income saved by age 30, with goals increasing as the years go on.
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The problem is that many people are struggling to save as it is, especially when they're so young and just starting out in their careers. The cost of living has set people back exponentially, to the point where they aren't putting that much money in their savings at all. In fact, a survey by the Pew Research Center found that 40% of Americans were either concerned that the money they had wouldn't last through retirement, or that retirement wouldn't even be an option for them.
Being able to retire after spending a lifetime working hard sounds great in theory, but it's just not feasible for a lot of people. If you already live paycheck-to-paycheck now, then you have nothing left over to save for the future, making the dream of retirement seem impossible altogether.
Nia Tipton is a staff writer with a bachelor’s degree in creative writing and journalism who covers news and lifestyle topics that focus on psychology, relationships, and the human experience.
