Do You Really Need $2 Million to Retire in 2025?

If you've been following retirement advice lately, you've probably seen the $2 million figure popping up. In 2025, with high living costs and longer retirements, many financial planners are pushing this bigger target.

But do you actually need $2 million to retire comfortably, or is it just another scary headline?

The truth: You might not need that much. It depends on your lifestyle, where you live, and how you plan to spend your retirement years.

Why $2 million is the new headline number

Inflation is still sticky in 2025, and many people worry their money won't go as far. Housing, healthcare, and insurance costs remain elevated compared to pre-pandemic levels.

At the same time, people are living longer, meaning your money needs to last 25-30 years in many cases. A $2 million nest egg sounds like a safe cushion.

But for many, it's not realistic, and it's not necessary if you're strategic.

Lifestyle and location matter more

A couple retiring in a high-cost city with travel plans and large discretionary spending may need closer to $2 million to feel secure.

But if you:

• Live in a low-cost state (or abroad)
• Have a paid-off home
• Live modestly

You may be able to retire on significantly less, especially with Social Security filling part of your income needs.

Higher yields are helping in 2025

With some high-yield savings accounts and CDs still offering between 4.00% to 5.00% APYs in 2025, retirees can generate more income from their cash. This can reduce the pressure to draw down your investments too quickly, helping your portfolio last longer.

If you can cover a chunk of your expenses with these yields, you might not need a full $2 million to retire confidently.

High-yield savings accounts earn up to 10 times the national average rate. Check out our best high-yield savings accounts page to find the right account for you.

Healthcare remains a wildcard

Healthcare costs can derail even the best-laid retirement plans. Medicare premiums, out-of-pocket costs, and long-term care can add up quickly.

To prepare, consider:

• Using an HSA if you're still working
• Factoring in healthcare inflation
• Looking into long-term care insurance or alternative plans

Withdrawal strategy matters

Whether you have $800,000 or $2 million, how you spend your retirement funds is critical. Consider:

• A conservative withdrawal rate (3%-4%)
• A bucket strategy to manage risk during market downturns
• Flexibility to adjust spending when needed

Do you actually need $2 million?

Aiming for $2 million isn't wrong if it motivates you to save. But it isn't a one-size-fits-all rule.

In 2025, a better question is:

• How much do you actually spend annually?
• What income will Social Security provide?
• Are you willing to adjust your lifestyle if needed?

If you run your numbers and find you can live comfortably with a smaller nest egg, you might not need to wait years longer to retire while chasing an arbitrary number.

Need some help with your plan? A short questionnaire from our partner, SmartAsset, helps match you with up to three fiduciary financial advisors, each legally bound to work in your best interest.

Here's your next step

If you're aiming for a confident retirement, whether it's with $800,000 or $2 million, start with:

• Tracking your real spending
• Estimating your Social Security benefits
• Stress-testing your plan against inflation and healthcare costs

Retirement planning in 2025 isn't about chasing a scary headline number. It's about creating a plan that lets you retire on your terms while protecting your peace of mind.