One of the greatest financial questions you’ll face in your lifetime is: How much money do I need to retire?
A recent study tries to help answer that question by revealing that U.S. adults believe the “magic number” they’ll need to retire comfortably is $1.46 million, a 15% increase over the $1.27 million reported last year and 53% more than the $951,000 reported in 2020.
If that sounds like a lot of money—and doesn’t match up with what’s sitting in your accounts—you’re not alone. According to Nerdwallet, the median retirement savings balance amount by age is:
| Age group | Median retirement savings balance amount |
| Under 35 | $18,880 |
| 35–44 | $45,000 |
| 45–54 | $115,000 |
| 55–64 | $185,000 |
| 65–74 | $200,000 |
| 75 and older | $130,000 |
With the large discrepancy between the “magic number” Americans believe they will need versus what they actually have, it’s unsurprising that 31% of adults say they aren’t sure they will have enough saved for retirement and 33% say they will not have enough saved.
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There’s no Magic Number When it Comes to Retirement
Does that $1.46 million number have you sweating? You can relax a bit knowing that most financial professionals agree that there’s no magic number that guarantees a comfortable retirement.
“Magic numbers” should be used as general benchmarks, but your retirement savings goal should be personalized based on your unique circumstances. Many people with pensions or low expenses will need far less than $1.46 million, while others may have a lifestyle that requires more savings.
As you consider how much money you will personally need to live a comfortable retirement, here are some things to consider:
- Retirement age: Do you plan to retire early, or work past your retirement age? Consider how your age at retirement will impact how long your savings will need to last.
- Longevity: It’s impossible to predict the future, but the number of people living to age 100 is steadily increasing. And the longer you live, the more retirement savings you’ll need. Try putting your information into a longevity illustrator to see how long you might live.
- Retirement lifestyle: Consider what your daily living expenses could look like in retirement. How much will you spend on your hobbies? Do you plan to travel? Do you already live a frugal lifestyle that you plan to continue through retirement?
- Healthcare and long-term care: These are two of the largest expenses you could face in retirement. How much will you spend on the routine medical care you know you’ll need? Have you considered how long-term care insurance can help safeguard your savings?
- Additional income sources: How much will you receive from Social Security and pensions? Will you perhaps pick up a part-time job or pursue a side gig that brings in some income after you retire?
- Inflation: Consider how the inflation rate could affect how much your retirement savings will be worth years from now.
Consult a Financial Professional for Personalized Retirement Advice
Creating a retirement savings goal and successfully reaching it is challenging, but you don’t have to figure it out alone. A financial professional can help you better understand how much money you need to save and how to reach your goals.
Want more? Check out our blog, Finding Your Number: What’s the Ideal Monthly Retirement Income for a Couple?
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