How Much Money Do Americans Think They Need To Retire?

Thinking of retiring means thinking about how much money you’ll need to retire comfortably, and a new study shows what Americans believe is the answer.

Americans think the “magic number” to retire is $1.26 million saved, according to new research from Northwestern Mutual. The majority of people said they don’t think they will feel financially prepared when the time comes. This year’s number is $200,000 less than the $1.46 million reported last year and about flat with estimates from 2022 and 2023.

However, about a quarter of Americans who have retirement savings said they have just one year or less of their current income saved for retirement. And more than half of Americans think it’s likely that they will outlive their savings, according to Northwestern Mutual.

With retirement depending on so many factors—how much your annual salary and living expenses are, what your assets add up to, when you’ll retire and inflation—it can be tricky to plan and save for the unknown. As a rule of thumb, Fidelity Investments suggests saving 10 times your annual salary by the time you are 67. If you plan to retire before or after then, the numbers fluctuate, but the financial services company suggests starting early and having one time your annual salary saved by age 30.

However, Northwestern Mutual’s data shows that about half of Gen X (currently 45-60 years old) say they have no more than three times their current annual income saved, and the majority also say they will need to work into retirement for additional income.

There is an upside, though, as Americans report they are saving sooner, planning to retire earlier, and expecting to live longer than the previous generation. More than 60% of Gen Z feel like they will be financially prepared when it comes time to retire, a higher portion than Gen X and millennials.