No matter what type of retirement you want, it's fair to assume that you'll need some amount of savings to fund it. But just how much money should you be aiming to sock away? That's a tough thing to figure out, which is why so many people struggle to come up with their so-called "retirement number."
For years, people would throw around $1 million as an optimal savings target. A new survey by Northwestern Mutual, however, finds that Americans think they need $1.46 million in savings to live comfortably once +r careers come to an end. That's an increase from 2023, when U.S. adults landed on $1.27 million as their ideal retirement savings target.
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Of course, it's not particularly surprising to see that number increase. In recent years, inflation has been notably rampant, and it's something that needs to be accounted for in the course of retirement planning.
Still, all of this begs the question: Should you be aiming for a $1.46 million IRA or 401(k) plan balance? Or should you be focusing on a different number entirely?
It's a matter of your personal retirement vision
The amount of money you'll end up needing as a retiree is personal to you. If you downsize your home and relocate to an area of the country that's not so expensive, you may need less savings than someone who doesn't shed square footage at home and stays in an area where living costs are higher.
Your health will also play a big role in your retirement finances. If you're in great shape heading into retirement, you might spend a lot less on healthcare throughout retirement than someone with a host of medical issues from the start.
That's why it's actually not such a great thing to fixate on surveys like the one above. The fact that Americans think $1.46 million is the magic retirement number may be a fun thing to know -- but it shouldn't necessarily guide your planning. Rather, you should look at your personal big picture when determining how much savings to amass.
Think big for great results
While your anticipated retirement lifestyle should help you narrow down a savings target for your senior years, you should also think about three other factors:
- The length of your retirement
- The way you'll invest during retirement
- The income sources you'll have available during retirement
If you're planning to end your career at age 60, you might need more savings than if you were to continue working until age 70. And if you have a family history of longevity, it could be wise to anticipate living into your 90s, as opposed to just your 80s.
Meanwhile, ideally, you won't have an all-cash nest egg in retirement. But if you intend to invest very conservatively, you might need more money in savings than someone who's looking to maintain a stock portfolio to some degree.
Finally, think about where you'll get money from in retirement. Even if Social Security is forced to cut benefits, you may be in line for a decent payday there. Plus, if you intend to delay your filing until age 70, you can snag a nice boot to those monthly payments for life. And if you intend to work a few hours a week for entertainment as much as financial gain, that's money that'll be coming your way, too.
All told, $1.46 million may or may not be the amount of money you need for a comfortable retirement. But rather than set your sights on that figure specifically, consider your personal circumstances, needs, and goals in the course of landing on a savings target.
