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How much money do you really need to retire comfortably? For the average American, the answer is $1.26 million, according to the 2025 Northwestern Mutual Planning & Progress Study. That number might feel ambitious — and for many, it is.
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The study found that 1 in 4 Americans with retirement savings have just one year’s worth of their current income saved — or less. Even more concerning, 51% of U.S. adults say it’s likely they’ll outlive their savings.
So why is there such a massive gap between what Americans think they need and what they actually have?
1. People start saving too late
On average, Americans don’t begin saving for retirement until age 31. That leaves just 30-some years to build a seven-figure nest egg. While Gen Z is starting earlier (around 24), older generations got a much later start, and it shows in their savings.
If you’re getting a late start, don’t panic. There are still ways to build real momentum. Consider ramping up your 401(k) and IRA contributions, taking advantage of employer matches, or using catch-up contributions if you’re over 50.
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2. Rising costs are outpacing savings
Inflation has pushed everyday expenses higher. Healthcare, housing, and long-term care costs are all rising faster than many Americans can keep up with.
That’s why today’s retirees need more money saved up than previous generations. A $1 million retirement fund doesn’t go as far as it did a decade ago, especially if you’re planning for a 30-year retirement.
3. Too much focus on growth, not enough on protection
According to the study, 61% of Gen Z and 60% of millennials say they focus heavily on growing their assets but neglect protecting them. That means things like life insurance, long-term care planning, and even budgeting often fall by the wayside.
But building wealth is only half the equation. Protecting what you’ve worked for is just as important. For example, people routinely lose out on interest by keeping their savings in a traditional savings account instead of a high-yield savings account (HYSA). HYSAs pay up to 10 times the national average rate.
If you need help striking the right balance between growth and safety, you can use this free tool from our partner SmartAsset that can match you to a fiduciary advisor.
4. Many Americans still rely on Social Security
Nearly half of Gen X worries Social Security won’t be there when they need it — and yet, many still plan to rely on it as a primary income source in retirement. Social Security is very likely not going to disappear completely, but payouts could drop.
Social Security is meant to supplement your savings, not replace them. Building up personal assets through 401(k)s, IRAs, and other investments is key to having control and security in retirement.
Don’t delay any longer
Americans might know what they need to retire comfortably — but knowing isn’t the same as doing. If you feel like you’re falling behind, now is the time to act.
With the right tools, advice, and a little urgency, it’s possible to close the gap.
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