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Americans Think $1.26 Million Will Buy a Comfortable Retirement. Here’s What That Could Buy You. todayheadline

August 9, 2025
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Will $1.26 million give you your dream retirement? Maybe.

Saving for retirement is very different from saving for other goals, like a home or car. If you’re looking to buy a house in a neighborhood where the average home price is $500,000, and you want to put down 20%, it means you need to save about $100,000 to meet that goal. If there’s a car you wish to purchase outright to avoid a loan that costs $40,000, that’s your savings target.

On the other hand, it can be very tricky to nail down a specific retirement savings number, especially when that milestone is decades away. That’s because you don’t know exactly when you’re going to retire, where you’ll live, and what you’ll want to do with your time.

Image source: Getty Images.

Recent data from financial planner Northwestern Mutual, however, offers a clue as to how much retirement savings you might aim for. According to its latest study, Americans think $1.26 million will make for a comfortable retirement.

But is that the number you should be aiming for? Let’s dive in.

What a $1.26 million nest egg might do for you

At first, $1.26 million might seem like a lot of money. But when we break it down over what could be a 30-year retirement, it starts to look a bit less impressive.

If we apply the 4% rule to $1.26 million in savings, it results in an annual income of $50,400. That does not include the inflation adjustments the 4% rule allows for.

Of course, that $50,400 is in addition to whatever Social Security pays you. Currently, the average monthly benefit among retired workers is about $2,000. If we add $24,000 a year to $50,400, it starts to paint a much more favorable picture. Then, you’re looking at an annual income of $74,400.

But whether that’s enough for you really depends on what you want retirement to look like. If you intend to keep a larger home that’s costly to maintain, or live in an expensive city, it may not be enough. The same holds true if you’re hoping to travel a lot or do other things with your time that cost money.

On the flipside, you may not need more than $70,000 a year in retirement if you intend to live in a low-cost area, have a paid-off home, and work part-time to keep busy as well as generate some income. And even if your intent is to retire in a city, if it’s an inexpensive one where you won’t need a car, your income needs may be more minimal.

How to get to $1.26 million in savings

If you like the idea of being able to retire with a $1.26 million nest egg, you should know that a number like that is attainable — provided you start early enough in your career so you can give your money time to grow. You’ll also need to be prepared to invest in stocks and other assets that lead to growth.

Let’s say you’re 35 and are beginning to save for retirement now with the goal of ending your career at 65. That gives you 30 years to build up a nest egg. If we assume your portfolio can generate a yearly 8% return, which is a bit below the stock market’s average, then you’ll need to sock away about $930 a month to get to $1.26 million.

However, that number changes if you begin saving for retirement at age 30 instead of 35. Assuming that same 8% return, at that younger age, you’ll only need about $610 per month to get to $1.26 million by 65.

If that smaller number seems a lot more palatable, push yourself to start saving for retirement as early as possible — whether you’re aiming for $1.26 million or another number. The more time you give your money to grow, the more pressure it takes off.

Tags: AmericansBuycomfortableHeresmillionRetirementtodayheadline
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