Americans Say They Need $1.26 Million to Retire — Here’s Why Most Are Falling Short

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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.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. 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 lateOn 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.Want a clear snapshot of where you stand? Use this no-cost quiz from our partner SmartAsset to get matched with up to three fiduciary advisors so you can get professional advice.2. Rising costs are outpacing savingsInflation 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 protectionAccording 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 SecurityNearly 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 longerAmericans 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.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.”}]] [[{“value”:”

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.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

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.

Want a clear snapshot of where you stand? Use this no-cost quiz from our partner SmartAsset to get matched with up to three fiduciary advisors so you can get professional advice.

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.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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