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Americans’ ‘Magic Number’ for a Comfortable Retirement Has Dropped $200K
By Pete Grieve MONEY RESEARCH COLLECTIVE
Retirement expectations are cooling, but savings still fall short for most.
The amount of money Americans think is necessary to retire decreased over the past year as inflation cooled, easing fears about retirement costs spiraling out of control. The shift was observed in an annual Northwestern Mutual survey that asks about respondents’ “magic number” for retirement.
On average, people believe they’ll need $1.26 million, a significant decrease from last year, when the estimate was $1.46 million.
“Americans’ ‘magic number’ to retire comfortably has come down — but it remains high, far beyond what many people have actually saved,” John Roberts, chief field officer at Northwestern Mutual, said in a release.
Last year’s magic number of $1.46 million was the highest ever observed. The theory was that the explosion in costs for housing, groceries and other items from 2021 to 2023 caused Americans to rethink how much they would need for their retirement.
This year, the magic number for retirement is more in line with 2022 and 2023 levels.
Still, most Americans fear they’ll run out of money in retirement, according to the survey, which polled more than 4,600 people in January. Even with the magic number estimate dropping, folks’ actual retirement savings are generally short of the amounts they think they’ll need in retirement. Gen X (people born between 1965 and 1980) notably still has a long way to go. “For Gen X’ers, many of whom are approaching their retirement years, 52% have 3x their current annual income or less saved. And the majority (54%) believe they will not be financially prepared for retirement when the time comes,” the Northwestern Mutual release said.
This Northwestern Mutual report isn’t the only annual survey asking a version of the magic number question. In July, a study from Charles Schwab found that the average amount of money people think they’ll need in retirement is $1.8 million.
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Pete Grieve is a New York-based reporter who covers personal finance news. At Money, Pete covers trending stories that affect Americans’ wallets on topics including car buying, insurance, housing, credit cards, retirement and taxes. He studied political science and photography at the University of Chicago, where he was editor-in-chief of The Chicago Maroon. Pete began his career as a professional journalist in 2019. Prior to joining Money, he was a health reporter for Spectrum News in Ohio, where he wrote digital stories and appeared on TV to provide coverage to a statewide audience. He has also written for the San Francisco Chronicle, the Chicago Sun-Times and CNN Politics. Pete received extensive journalism training through Report for America, a nonprofit organization that places reporters in newsrooms to cover underreported issues and communities, and he attended the annual Investigative Reporters and Editors conference in 2021. Pete has discussed his reporting in interviews with outlets including the Columbia Journalism Review and WBEZ (Chicago's NPR station). He’s been a panelist at the Chicago Headline Club’s FOIA Fest and he received the Institute on Political Journalism’s $2,500 Award for Excellence in Collegiate Reporting in 2017. An essay he wrote for Grey City magazine was published in a 2020 book, Remembering J. Z. Smith: A Career and its Consequence.