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Americans have lowered their estimated financial needs in retirement

At the same time, more retirees expect to outlive their savings

Updated:

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By:
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Mark Huffman
Reporter

Mark Huffman has covered consumer issues since 2004, with a special focus on protecting and empowering older adults. A former news correspondent for the Associated Press Radio Network, Westwood One, and ConsumerAffairs, Mark brings decades of journalistic experience to RetirementLiving.com. He is passionate about giving consumers a voice and helping them make informed decisions. Mark has also created educational content, including Senior Scam Alert, a video resource designed to help seniors recognize and avoid fraud. He holds a B.A. from the University of Kentucky and lives with his family in Richmond, Virginia.

Photo by Allef Vinicius on Unsplash

Key Insights

  • Americans’ 2025 “magic number” for retirement is $1.26 million, down from $1.46 million in 2024 and closer to 2022–2023 levels.
  • One in four savers (25%) say they have just one year or less of their current annual income put away for retirement.
  • More than half (51%) of U.S. adults fear outliving their savings, but a third haven’t taken steps to prevent it.

New data from Northwestern Mutual’s 2025 Planning & Progress Study reveals a contradiction: Americans have lowered the amount of money they think they need in retirement, but more than half now expect to outlive their savings.

The headline finding: Americans now believe they need $1.26 million to retire comfortably. While that’s $200,000 less than last year’s estimate of $1.46 million, the updated figure is nearly flat compared to 2022 and 2023 levels, suggesting Americans’ expectations are stabilizing after years of inflation-driven anxiety.

“Americans’ ‘magic number’ has come down – but it remains high, far beyond what many people have actually saved,” said John Roberts, chief field officer at Northwestern Mutual.

Despite the slightly lower target, 25% of Americans with retirement savings say they have just one year or less of income saved. The picture is especially concerning for Gen X, where over half (52%) have saved just three times their income or less, and 54% believe they won’t be financially ready for retirement.

Fear of outliving savings grows

The study shows growing financial anxiety around longevity:

  • 51% of all U.S. adults think it’s likely they’ll outlive their savings.
  • Only 16% consider that outcome “very unlikely.”
  • 35% have taken no steps to plan for this possibility.

This sense of vulnerability is not evenly distributed. Older generations like boomers are slightly more confident, but Gen X and Millennials show heightened concern. Gen Z, interestingly, reports the highest confidence in being prepared, despite being farthest from retirement age.

Northwestern Mutual’s analysis underscores how timing impacts the journey to $1.26 million. For example:

  • Starting at age 20: $330/month investment needed
  • Starting at age 30: $695/month
  • Starting at age 40: $1,547/month
  • Starting at age 50: $3,958/month

These estimates assume a 7% return and consistent monthly investing. The clear message? Waiting comes at a steep cost.