The Average American’s Retirement Number Is $1.26M. Mine’s Double That

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The latest Northwestern Mutual Planning & Progress study found that the average American now believes they’ll need $1.26 million to retire comfortably. That’s down a fair bit from last year’s reported “magic number” of $1.46 million.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
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Click here to read our full review for free and apply in just 2 minutes. But here’s the thing: averages can be really misleading. When my wife and I ran our own numbers, we landed on a totally different goal. We’ll need a nest egg in the $2.5 million range to be comfortable in retirement.Here’s how to calculate your retirement number — and a few next steps if you’re just starting out saving.How to work out your “magic number”I asked Motley Fool retirement expert Robert Brokamp how the average person can do the math at home. He gave me this ultra-simple three-step formula:”Retirement needs, resources, and ages are so different for each person, no one number suits everyone.A better back-of-the-envelope method would entail:Estimate how much income you’ll need in retirement (adjusted for inflation).Subtract the amount you’ll receive from Social Security and other non-portfolio sources (e.g., a pension).Multiply the result by 25, which gives you the size of the portfolio you need to provide that amount of income.”That last part — multiplying by 25 — is based on the classic 4% rule of retirement. And while it’s not perfect, it gives you a realistic ballpark number to shoot for.Need a little help running your numbers? Even with a simple formula, it can be tricky to know if you’re really on track — especially once you start factoring in Social Security, taxes, healthcare, and big goals like travel.If you want a real, detailed plan, our partner SmartAsset can match you with up to three fiduciary advisors so you can get professional advice. Start here.Example: My $2.5 million retirement goalMy wife and I estimate we’ll need around $100,000 per year in retirement income. That’ll cover our housing, travel, food, and a new surfboard every few years (yes, I plan to keep surfing into my 80s).We don’t have any pensions, and to keep things simple I’m not factoring in any Social Security income (truth be told, my wife and I plan to retire before the age those benefits kick in)Multiplying our retirement income by 25 brings us to our retirement goal.$100,000 x 25 = $2.5 millionWe might not hit that exact number. But just having a clear, personalized target feels way better than winging it and hoping we have enough.More examples based on the 4% rule:Here’s a quick and easy chart with more scenarios.Target IncomeRetirement Goal$40,000$1,000,000$60,000$1,500,000$75,000$1,875,000$100,000$2,500,000$120,000$3,000,000Data source: Author’s calculations.Remember, if you have a guaranteed pension, or you’ll receive Social Security benefits, you can subtract that amount from your future income needs. You can get a Social Security benefit estimate pretty quickly anytime at SSA.gov!How to start saving for retirementIt’s very intimidating to have a multimillion-dollar retirement goal. But everyone starts somewhere — and the most important step is just starting.Here’s the lowest hanging fruit to save faster.Start with your 401(k), if you have one: Especially if your employer offers a match, try and sock away 10% to 15% of your salary.Open an IRA: A Roth IRA or traditional IRA is a great place to begin if you don’t have access to a 401(k). You can start investing with just a few bucks.Automate your savings: Set up monthly recurring transfers so saving happens behind the scenes. Out of sight, out of mind.Increase contributions over time: Got a raise? Bump up your savings rate by 1%. Small moves compound in a big way.Invest wisely: Growing wealth doesn’t happen overnight. Target date funds and index funds are a great place to start, because of their low fees and broad diversification.And if you want a real plan — not just a guess — it can help to get expert guidance. Use this free tool from our partner SmartAsset and get matched with up to three fiduciary investment advisors.Don’t just guess — run your numbersThe average retirement number might be $1.26 million. But your life is not average. You’ll feel way better and more in control when you have a personalized goal and plan for retirement.It’s not about being perfect — it’s about being proactive. And if you’re not sure where to start, it helps to work with a pro.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”:”

The latest Northwestern Mutual Planning & Progress study found that the average American now believes they’ll need $1.26 million to retire comfortably. That’s down a fair bit from last year’s reported “magic number” of $1.46 million.

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.

But here’s the thing: averages can be really misleading. When my wife and I ran our own numbers, we landed on a totally different goal. We’ll need a nest egg in the $2.5 million range to be comfortable in retirement.

Here’s how to calculate your retirement number — and a few next steps if you’re just starting out saving.

How to work out your “magic number”

I asked Motley Fool retirement expert Robert Brokamp how the average person can do the math at home. He gave me this ultra-simple three-step formula:

“Retirement needs, resources, and ages are so different for each person, no one number suits everyone.

A better back-of-the-envelope method would entail:

1. Estimate how much income you’ll need in retirement (adjusted for inflation).
2. Subtract the amount you’ll receive from Social Security and other non-portfolio sources (e.g., a pension).
3. Multiply the result by 25, which gives you the size of the portfolio you need to provide that amount of income.”

That last part — multiplying by 25 — is based on the classic 4% rule of retirement. And while it’s not perfect, it gives you a realistic ballpark number to shoot for.

Need a little help running your numbers? Even with a simple formula, it can be tricky to know if you’re really on track — especially once you start factoring in Social Security, taxes, healthcare, and big goals like travel.

If you want a real, detailed plan, our partner SmartAsset can match you with up to three fiduciary advisors so you can get professional advice. Start here.

Example: My $2.5 million retirement goal

My wife and I estimate we’ll need around $100,000 per year in retirement income. That’ll cover our housing, travel, food, and a new surfboard every few years (yes, I plan to keep surfing into my 80s).

We don’t have any pensions, and to keep things simple I’m not factoring in any Social Security income (truth be told, my wife and I plan to retire before the age those benefits kick in)

Multiplying our retirement income by 25 brings us to our retirement goal.

$100,000 x 25 = $2.5 million

We might not hit that exact number. But just having a clear, personalized target feels way better than winging it and hoping we have enough.

More examples based on the 4% rule:

Here’s a quick and easy chart with more scenarios.

Remember, if you have a guaranteed pension, or you’ll receive Social Security benefits, you can subtract that amount from your future income needs. You can get a Social Security benefit estimate pretty quickly anytime at SSA.gov!

How to start saving for retirement

It’s very intimidating to have a multimillion-dollar retirement goal. But everyone starts somewhere — and the most important step is just starting.

Here’s the lowest hanging fruit to save faster.

• Start with your 401(k), if you have one: Especially if your employer offers a match, try and sock away 10% to 15% of your salary.
• Open an IRA: A Roth IRA or traditional IRA is a great place to begin if you don’t have access to a 401(k). You can start investing with just a few bucks.
• Automate your savings: Set up monthly recurring transfers so saving happens behind the scenes. Out of sight, out of mind.
• Increase contributions over time: Got a raise? Bump up your savings rate by 1%. Small moves compound in a big way.
• Invest wisely: Growing wealth doesn’t happen overnight. Target date funds and index funds are a great place to start, because of their low fees and broad diversification.

And if you want a real plan — not just a guess — it can help to get expert guidance. Use this free tool from our partner SmartAsset and get matched with up to three fiduciary investment advisors.

Don’t just guess — run your numbers

The average retirement number might be $1.26 million. But your life is not average. You’ll feel way better and more in control when you have a personalized goal and plan for retirement.

It’s not about being perfect — it’s about being proactive. And if you’re not sure where to start, it helps to work with a pro.

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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