Taylor Schulte

"Magic" retirement number?

Published about 1 month ago • 2 min read

Hi Reader,

New research has found a new "magic" retirement savings number.

I say “magic” because if you put 10 people in a room, you’ll get 10 different opinions about how much you should save for retirement.

And this estimate is no different.

Northwestern Mutual recently surveyed 4,588 adults and found:

The new “magic” number for a comfortable retirement is $1.46 million.

It’s up 15% from last year’s $1.27 million number and is also an eye-popping 53% higher than the 2020 estimate.😳

Broken down by generation, the numbers get even bigger.

Gen Z and Millennials expect to need around $1.6 million to comfortably retire.

And folks with over $1 million saved believe they’ll need ~$4 million to be comfortable.

Does the average American actually need $1.46 million to retire comfortably?

Probably not.

Another “magic” number from Fidelity suggests Americans should have 10x their income saved by age 67.

If we 10x the median household income of $74,580, we get $745,800.

That’s about half of the first “magic” number.

For some Americans, $750k will be enough to retire on.

For others, it won't be nearly enough to support the lifestyle they want.

Planning for retirement isn’t about “magic” numbers.

When we consider that the average retirement savings hovers around $88,000, the gap between desire and reality has never been greater.

Most people don’t really know how much money they will need in retirement, and can wildly overestimate it.

As much as humans like to look for simple answers and rules to follow, calculating your own retirement savings amount is complex.

Turning your nest egg into a retirement paycheck you won't outlive is even more complex.

Throw the taxes into the picture, and you can toss all of the surveys and "rules of thumb" out the window.

So why has the "magic" retirement number jumped 50% since 2020?

I think it's safe to say that inflation is weighing heavily on retirement savers' fears for the future.

Inflation has been higher than normal for the last few years, and the survey reflects the worry many feel about how much prices are rising.

And how long high inflation will linger.

The latest March 2024 CPI report shows that prices rose 3.5% over the last 12 months.

While year-over-year prices are near our long-term historical average, the 0.4% spike last month was stronger than analysts expected, increasing concerns that inflation has yet to be tamed.

This negative surprise has pushed back interest rate cuts and stoked market volatility again.

On a positive note, investors will have another 1-2 years of 4-5% money market rates.

As always, I will continue to monitor and provide updates as we learn more.

What do you think about "magic" retirement numbers? Do you think they're useful?

Do you have any questions about your retirement you haven't asked me?

Hit "Reply" and let me know.

Stay wealthy,

Taylor Schulte, CFP®

When You're Ready, Here Are 3 Ways I Can Help You:

1 - Free Retirement & Tax Analysis​. Learn how to improve retirement success + lower taxes.

2 - Stay Wealthy Retirement Show​. An Apple Top 50 investing podcast.

3 - Retirement Podcast Network​. A safe place to get accurate information.

Taylor Schulte

Retirement and tax planning plain English.

I'm the host of the Stay Wealthy Retirement Show and founder of Define Financial, an award-winning retirement and tax planning firm. When I’m not helping people lower their tax bill, you can find me traveling with my wife and kids, searching for the next best carne asada burrito, or trying to master Adam Scott’s golf swing.

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