If there were a magic number that guaranteed financial security in retirement, building a nest egg would perhaps be less stressful. But because each individual’s needs are unique, there’s no single guidance for retirement savings that could possibly apply to everyone. Your best bet is to think about what you want your retirement to look like, and then work with a financial adviser to meet your goals.
That said, Northwestern Mutual surveyed Americans across age groups last year to determine how much money they believed it would take to retire comfortably. And the magic number for a comfortable retirement was $1.26 million. That's a drop from $1.46 million the year before.
Of course, $1.26 million doesn't come close to reflecting the typical American's savings. The average 401(k) balance among baby boomers was $267,900 as of late 2025, according to Fidelity.
Vanguard research doesn’t paint a much more positive picture. As of 2024, the last year for which data is available, average retirement savings among Americans ages 65 and over were $299,442, while median savings were $95,425
A major reason for these large gaps between desired and actual savings is that many workers lack employer support to save and plan for the future. That's why BlackRock CEO Larry Fink insists that a secure retirement is mostly attainable for Fortune 500 workers, and not necessarily for the typical American.
But the reality is that even if you manage to accumulate a $1.26 million nest egg, it may not buy you the retirement you desire. Or will it? It depends on you.
What $1.26 million might do for you
With $1.26 million to your name, you may have an opportunity to enjoy a decent annual income from your savings alone, not accounting for income you get elsewhere, like Social Security benefits.
If you were to apply the 4% rule to a nest egg that size, it would amount to an annual income of $50,400, not accounting for inflation-related adjustments. (Morningstar recently updated that withdrawal guidance to 3.9% for 2026, but it could shift higher or lower in the future, so it pays to be flexible.)
Will that amount, coupled with other income streams you might have, be sufficient? It depends on where you live and how you choose to spend your days. Your health care needs will also play a role, as will the nature of your savings from a tax perspective. A $1.26 million Roth IRA buys you more financial flexibility as a retiree than $1.26 million in accounts that are completely taxable.
But still, if we take the average monthly Social Security check of $2,071 and add it to the $50,400, the result is an annual paycheck of about $75,000. And that assumes only one person in your household receives Social Security benefits. There may be a second set of benefits to enjoy as well, pushing your overall household income higher.
All told, with $1.26 million and other income streams, you’re potentially looking at a comfortable lifestyle, especially if you’re debt-free, but not necessarily a luxurious one. A single nice trip per year may be doable, but traveling abroad every three months may not be in the cards. You’ll need to consider whether you’d be satisfied with a comfortable lifestyle, rather than being truly well-off.
Americans lack retirement confidence on a whole
In addition to facing a savings gap, Northwestern Mutual found that Americans today aren't very confident about retirement. Across all age groups, 51% said they're likely to outlive their savings. And 46% said they don't think they'll be prepared financially for retirement when the time comes.
If you're not feeling confident about retirement, no matter your age, it's wise to work with a financial adviser to set up a savings plan and retirement portfolio that support long-term growth. That could mean taking on more risk during your early years and reducing your risk profile as retirement nears.
An adviser could also help you fill in other gaps in your retirement planning, such as long-term care and life insurance.
There may be other steps you can take to boost your retirement confidence. Delaying Social Security past full retirement age for larger monthly checks could give you more peace of mind and help make up for a smaller nest egg. An annuity could also be a good source of guaranteed income, though you'll need to weigh the pros and cons to see if that's right for you.
It's up to you
At the end of the day, the $1.26 retirement savings goal Americans seem to have landed on should not be taken as gospel. You can use it as a starting point if you like. Or, you can chalk it up to an interesting piece of survey data that doesn’t influence your long-term plans in the slightest. The choice is yours, since ultimately, the only needs and goals you have to worry about are the ones you decide on yourself.
How do your savings compare?
These articles give a sense of how your savings compare to those of your peers.
Average 401(k) Balance by Age and Generation
Average IRA Balance by Age and Generation
Average Retirement Savings by Age
