The amount of money Americans think they need to retire comfortably continues to grow.
According to Northwestern Mutual’s 2024 Planning and Progress Study, Americans say they need about $1.46 million on average to retire comfortably. That’s up 15% from last year’s $1.27 million and 53% from the 2020 goal of $951,000, the report said.
And younger generations think they’ll need even more.
Gen Z, defined as people between the ages of 18 and 27, the study said they’ll need about $1.63 million. Millennials (defined as those ages 28 to 43) are expected to need $1.65 million.
“People’s ‘magic number’ to retire comfortably has exploded to an all-time high, and the gap between their goals and progress has never been wider,” Aditi Javeri Gokhale, Northwestern Mutual’s chief strategy officer and head of institutional investments, said in the report. “Inflation is expanding our expectations for retirement savings, and putting the pressure on to plan and stay disciplined.”
With this in mind, Experts calculated how much someone making $50,000 a year should save each month to have $1.46 million to retire at age 65. These calculations assume you start with $0 in savings and don’t take into account unforeseen life events like raises, promotions, layoffs, or market fluctuations.
If you start at 21
- Earning a 5% annual rate of return: $759 per month
- Earning a 7% annual rate of return: $414 per month
- Earning a 9% annual rate of return: $216 per month
If you start at 25
- Earning a 5% annual rate of return: $957 per month
- Earning a 7% annual rate of return: $556 per month
- Earning a 9% annual rate of return: $312 per month
If you start at 30
- Earning a 5% annual rate of return: $1,285 per month
- Earning a 7% annual rate of return: $811 per month
- Earning a 9% annual rate of return: $496 per month
While it’s helpful to have a savings goal in mind when planning for retirement, it can also feel a bit overwhelming if you’re not there yet. Plus, your retirement account balance can be affected by factors you can’t control, like stock market fluctuations.
That’s why it’s important to focus on what you can control, like your savings rate. This is the percentage of your annual income you set aside each year for retirement.
Fidelity Investments, one of the nation’s largest 401(k) providers, recommends a savings rate of 15%, including an employer match when available.
Even if you can’t save a lot for retirement right now, it’s better to start earlier, says Ann Lester, retirement expert and author of “Your Best Financial Life: Save Smart Now for the Future You Want.”
“The best thing to do is start when you’re young,” she tells CNBC Make It. “It’s a really powerful thing to do because the money you save will have more time to grow for a longer amount of time.”