Magic Number: $1.46 Million



In another sign that much of our life planning and decision making continues to reflect a line in the sand (before pandemic/after pandemic), the amount of money Americans believe is needed to retire safely has risen dramatically since 2020. Unfortunately, another reality of the times is getting in the way of this goal: we are saving less.


Desired Vs Actual?

While we seem to be increasingly knowledgeable about what it will take to finance longer lives in more expensive times, our retirement savings are not well matched with reality, according to Northwestern Mutual’s 2024 Planning & Progress Study. Specifically, findings reveal that the magic number for retirement has risen, though actual dollars saved is decreasing:


U.S. adults believe they will need an average of $1.46 million to retire comfortably, which is…a robust 50% higher than at the beginning of the COVID-19 pandemic in 2020 when Americans’ target number was $951,000….However, Americans are saving less for retirement. U.S adults have an average of $88,400 saved for retirement….That reflects….a decrease of more than $10,000 from 2021.


“In 2023, the soaring cost of eggs in the grocery store symbolized inflation in America. In 2024, it’s nest eggs,” said Aditi Javeri Gokhale, chief strategy officer…at Northwestern Mutual. “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. Inflation is expanding our expectations for retirement savings, and putting the pressure on to plan and stay disciplined.”


Not surprisingly, age and circumstance impact “the magic number” believed to be needed for retirement. So too do our goals related to the desired age of retirement:


While boomers’ target retirement saving total was $990,000, Generation X was at $1.56 million, millennials were the highest at $1.65 million and Generation Z was at $1.63 million. Meanwhile high-net-worth individuals, who have more than $1 million in investable assets, pointed to a magic number of $3.93 million. … .The boomer generation said they started saving for retirement at age 37 and expect to work until they are 72 years old. In contrast, Gen Z’s average age to start saving for retirement is 22, and they expect to retire a dozen years earlier at 60. Across all generations, the average age that Americans started saving for retirement is 31, and they expect to retire at age 65.


Harsh reality checks about aging and retirement are coming fastest of course for Baby Boomers and Gen X. Perhaps as a reflection of that, the annual study from Northwestern Mutual finds these two generations the most pessimistic about preparedness: “with just 49% of boomers and 48% of Gen X believing they will be financially prepared for retirement when the time arrives. Similarly, Gen X on average believes there is a 42% chance they could outlive their savings, and boomers put the chance at 37%.

Silver Lining?

As many workers face the scary prospect of needing more but having less, financial experts remind us that employers who sponsor retirement plans can make a big difference toward setting employees up for retirement success. Meaningful steps employers can take to improve retirement outcomes  for workers include: access to qualified financial advisors for retirement planning, coupled with tailored strategies for reducing debt and navigating emergencies and achieving other life goals, like buying a home. As Northwestern Mutual leadership reminds us, solid financial planning can make all the difference: “Done well, a comprehensive financial plan can preserve thousands of hard-earned dollars to fund these golden years. For anyone who is not sure how to streamline and preserve every penny, an expert financial advisor can be a great resource.”


Another way retirement plan sponsors can have a big impact is by diligently assessing the fee structures that might be eating away at the savings of participants, as numerous ERISA litigation cases have demonstrated. Indeed, 74% of plan sponsors this year have indicated that plan fees are their top fiduciary concern, and are digging in on 401k benchmarking.


Help For Plan Sponsors

As a sponsor, you make a difference in the lives of employees–and their beneficiaries, but that entails navigating the complexities of ERISA regulations.Unforeseen challenges arise all the time, and seemingly small oversights have been triggering costly lawsuits. The average ERISA claim costs businesses like yours over $1.2 million in legal fees.

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Colonial Surety was founded in 1930 and continues giving customers the assurance that they, their businesses, and their clients are safeguarded with the right surety and insurance products at all times. We are a direct and digital insurer offering products through an online platform supported with exemplary customer service. We give customers a simple, direct, and instant service that takes the pain out of buying insurance and bonds. Colonial Surety is licensed in every state in the U.S., rated “A” Excellent by A.M. Best, and listed by the U.S. Treasury as an approved surety.