Are You on Track for Retirement? Most Americans Aren't -- Here's How to Catch Up
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KEY POINTS
- The average American believes they need $1.26 million to retire comfortably, but most have saved far less -- with 1 in 4 saving just one year's worth of income.
- Many Americans are underestimating how long their retirement will last, with younger generations expecting to live longer and retire earlier -- increasing the need for a larger nest egg.
- Diversifying income streams and planning beyond Social Security is critical, especially as more Americans fear outliving their savings.
If you're feeling a little behind on your retirement savings, you're not alone.
According to the 2025 Northwestern Mutual Planning & Progress Study, the average American believes they need $1.26 million to retire comfortably. Yet the reality is far grimmer: One in four Americans who have retirement savings say they've put away just one year or less of their current income. Even more concerning, 51% of U.S. adults think it's likely they'll outlive their money.
In short, most people aren't on track. But the good news is, there are practical steps you can take today to catch up -- no matter where you're starting from.
1. Know your retirement number
Before you can catch up, you have to know where you're headed and how much you will actually need.
While $1.26 million is the "magic number" many Americans cite, your target will be higher or lower depending on your lifestyle, health, and whether you plan to work part-time in retirement (like 40% of Americans say they will).
Need help running the numbers? You can use this free tool from our partner SmartAsset that can match you to a fiduciary advisor.
2. Prioritize catch-up contributions
If you're 50 or older, the IRS allows you to contribute extra to your 401(k) and IRA accounts through "catch-up" contributions. It's one of the best ways to supercharge your savings in a short time.
Even if you're younger, consider upping your contributions now. Automated savings -- even small increases -- can make a big difference over time thanks to compound growth.
3. Don't rely solely on social security
The Northwestern Mutual study found that nearly half of Gen X is worried about whether Social Security will still be there when they retire. It's a fair concern.
Instead of counting on Social Security alone, build multiple income streams: 401(k)s, IRAs, brokerage accounts, and even side gigs if needed. Diversifying where your income will come from in retirement is crucial for stability.
A financial advisor can help you craft a plan that doesn't leave you vulnerable to future benefit cuts. Find an advisor through our partner, SmartAsset. Their short questionnaire helps match you with up to three fiduciary financial advisors, each legally bound to work in your best interest.
Don't stress, just act
Falling behind on retirement savings isn't something to feel guilty about -- but it is something to take action on. With a few smart moves, you can get back on track and feel more confident about your future.
Our Research Expert
Jake is a full-time Editorial Strategist for Motley Fool Money. He specializes in product ratings and all things credit cards, and wants to make sure each person has the best card for them.
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