As the inflation rate fluctuates, workers’ “magic number” for retirement drops $200,000, returning to 2022 and 2023 levels, according to Northwestern Mutual. The financial services firm released its 2025 Planning & Progress Study that finds U.S. adults believe they will need $1.26 million to retire comfortably. More than half of Americans think it’s somewhat or very likely they will outlive their savings.
However, one in four (25%) Americans with retirement savings say they have just one year or less of their current annual income put aside for it. And more than half (51%) of Americans think it’s somewhat or very likely they will outlive their savings. In contrast, only 16% feel confident enough to say the prospect of outliving their wealth is “very unlikely.” Meanwhile, more than a third (35%) of Americans say they have not taken any steps to address that potential outcome.
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However, among Americans who have retirement savings, one in four (25%) say they have just one year or less of their current annual income put aside for it. 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 amount Americans need to invest each month to accumulate $1.26 million by age 65 depends on several factors – especially when they start saving. Overall, Americans say they started saving for retirement at age 31 and plan to retire at age 65. But across every generation, Americans report they are saving sooner, planning to retire earlier, and expecting to live longer.
Individuals starting at:
- Age 20 would need to invest $330 per month
- Age 30 would need to set aside $695 per month – assuming a 7% rate of return compounded daily
- Age 40 would need to save $1,547 per month
- Age 50 would need to invest $3,958 per month
This equation assumes that individuals save regularly and never borrow from their retirement savings accounts before reaching age 65.
"Americans’ ‘magic number’ to retire comfortably has come down – but it remains high, far beyond what many people have actually saved,” said John Roberts, chief field officer at Northwestern Mutual. “One explanation for the new number could be inflation – while still people’s #1 concern – isn’t as elevated as it was in recent years. Inflation is often described as ‘sticky’ because it can take a long time for people’s attitudes about it to change.
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“The inflation rate retreated from 6% in 2023 to about 3% in 2024, and now in 2025, Americans are adjusting their perceptions about their future financial needs. At the same time, the level of concern about their current savings has ratcheted up. More than half of Americans believe outliving their life savings is a real possibility, and the vast majority are living with financial anxiety.
“It’s important to remember that retirement planning is deeply personal. Everyone deserves their own ‘magic number’ that considers where they will live, what lifestyle they will have, their sources of income, and more. Rules of thumb are everywhere, but nothing is better than a financial plan that’s personalized and custom-built just for you.”
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
