According to Northwestern Mutual’s 2025 Planning & Progress Study, the polarizing “magic number” Americans think they need to reach to retire comfortably has gone down slightly for 2025 to $1.26 million, which is $200,000 less than the all-time high $1.46 million the company reported last year, and is nearly flat with its 2022 and 2024 estimates.
But just because the updated number released today is out there doesn’t mean most Americans are going to get there, or anywhere close. In fact, the new Northwestern Mutual report found that 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 retirement.
“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 No. 1 concern—isn’t as elevated as it was in recent years.”
Roberts added that inflation is often described as “sticky” because it can take a long time for people’s attitudes about it to change. 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 (51%) believe outliving their life savings is a real possibility, and the vast majority are living with financial anxiety,” Roberts said. “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.”
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. Individuals starting at age 20 would need to invest $330 per month, others starting at age 30 would need to set aside $695 per month—assuming a 7% rate of return compounded daily. The longer they wait, the more they need to invest. People starting at age 40 would need to save $1,547 per month, and if they postpone saving to age 50, they 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.
In general, Northwestern Mutual recommends that people aim to replace around 80% of their pre-retirement income. However, the actual ‘magic number’ calculation for each person will depend on things like when they want to retire, where they’ll live, and what kind of lifestyle they want to maintain throughout their retirement years.
The study also found that only 9% of Americans have 10 times their annual income saved for retirement. With an average annual U.S. household income of $80,000, Americans would need about 15 times their annual income to meet the NWM “magic number” goal.
Outliving wealth a real concern
The study found 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.
Overall, working age 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.
For Gen X, 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.
Gen Z on the other hand is the most confident in their retirement plans, with 63% believing they will be financially prepared for retirement when the time comes. On average, Gen Zers started saving at 24, aim to retire at 61, and more than a third (34%) think it’s likely they’ll live to 100.
“Younger Americans have ambitious financial goals—and they’re taking action to reach them,” Roberts said. “If this generation determines how much they need to save, continues to generate wealth, and protects what they’ve already built, they could be in a strong position to achieve financial security.”
Boomers+ started saving at 37, aim to retire at 72, and less than a quarter (23%) think it’s likely they’ll live to 100.
Eight in 10 U.S. adults say their vision of retirement is different than how their parents’ generation viewed it, and a third (32%) say they expect their retirement to last 10+ years longer than their parents.
When it comes to people’s burning questions about retirement, concerns about Social Security and inflation are more pressing than other major planning challenges, including outliving life savings, planning for long-term care, managing taxes, and budgeting for healthcare.
Only about one in four Gen Xers (26%) and Boomers+ (27%) say that they plan to delay receiving their Social Security benefits as long as possible to maximize their monthly benefit. Under half of Gen Xers (46%) and Boomers+ (45%) say they will start receiving their benefit when they hit their full retirement age, while 28% say they will start to receive payments as soon as they are eligible, even though their monthly benefit may be reduced.
“There is no right or wrong way for people to claim Social Security benefits, but if people plan intentionally, it can pay to wait,” said Roberts. “Anyone who activates payments at age 67 instead of age 62 could grow their checks by 30%, and if they wait to age 70, they could see an additional 24%.”
Interestingly, there’s a sizable gap in importance among generations when it comes to Social Security. For Gen X, the question about whether Social Security will be there when they need it is nearly on equal footing to the question about how much they will need to retire comfortably. For Gen Z, concern about Social Security is significantly lower.
“There’s a huge difference in the way you might look at Social Security if your retirement years feel a long way off versus when they’re fast approaching,” said Roberts. “For Gen X, the possibilities and practicalities of retirement are feeling very real right now. For Gen Z, they are likely more focused on other pressing financial matters.”
SEE ALSO:
• $1.46 Million: New ‘Magic Number’ for a Comfortable Retirement
• States Where $1.5 Million Lasts Longest, Shortest in Retirement
• Social Security Issues: Flurry of Changes Sparks Confusion
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.