The ‘Magic Number’ To Retire Comfortably Hits A New All-time High
Inflation has made the cost of just about everything in the U.S. more expensive – including retirement.
A new study published by Northwestern Mutual found the “magic number” that Americans believe they need in order to retire comfortably hit $1.46 million this year, the highest level on record.
The figure represents a nearly 15% jump from the $1.27 million that Americans said they needed in 2023, easily outstripping the current 3% inflation rate in the country.
Over the past five years, Americans’ “magic number” has surged 53% from the $951,000 reported in 2020, according to the financial services firm.
By generation, both Gen Z and millennials anticipate they will need more than $1.6 million to retire comfortably. Among high net-worth individuals – or those with more than $1 million in investable assets – the figure catapults to about $4 million.
Even though they expect to need more money in retirement, Americans are not actually saving more.
The average amount that U.S. adults have tucked away for retirement fell to $88,400 from $89,300 in 2023. However, that is down more than $10,000 from the five-year peak of $98,800 in 2021, the study said. In total, the gap between what people think they need for retirement and what they have actually saved is $1.37 million. By comparison, just five years ago, that was about $874,000.
“Across all segments, there are large gaps between what people think they’ll need to retire and what they’ve saved to date,” the study said.
