No two people are exactly alike, and neither are their dreams for retirement. However, there is a common thread that unites them: Most Americans believe they will need $1.27 million to retire comfortably, according to Northwestern Mutual’s 2023 Planning & Progress Study. This number ticked up from $1.25 million last year.
The good news is that Americans are saving and investing more than ever to create future prosperity. Their retirement savings increased in 2023 by 3%, growing to $89,300. That’s a step in the right direction and a reverse of what we saw last year when the gap widened rather than narrowed. The challenge, however, is clear: There continues to be a big disparity between what people think they’ll need to retire and what they’ve saved to date.
While it’s interesting and instructive to hear what others might need for a comfortable retirement, it’s important for people to remember that they are living for their own hopes and dreams, not someone else’s. That’s why I strongly urge everyone to focus on what’s important to them and what makes sense for their retirement. A personalized, comprehensive financial plan can protect the wealth that has already been built and create future prosperity — and, with the help of a knowledgeable professional, people can achieve retirements as distinctive as they are.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
From my experience, there are four questions that can help Americans define their retirement so they can build the life they want today and tomorrow.
1. What’s the ideal retirement?
Does retirement mean walking away from a job completely, or is it finding new work that gives life greater meaning? One of the best gifts that financial planning provides is time, and our study shows that with formal planning and discipline, Americans believe they could retire four years sooner — unlocking nearly 1,500 days of purposeful living.
2. What number makes sense?
Cost of living, lifestyle, longevity, risk tolerance and a retirement date are all important to consider. The study shows Gen Z plans to live until 100 and retire at 60, which gives them 40 years of retirement.
That goal sounds incredible to me, but an extended retirement like that demands careful planning to ensure they have enough savings. Most Americans plan to work until 65, up from 64 last year.
3. Are you ready for any situation?
Unfortunately, unexpected things will happen to all of us at some point in our lives. Whether it’s a layoff, long-term illness, injury or inflation, are you ready financially for the unexpected?
On average, Americans say there is a 45% chance they may outlive their savings — and 33% haven’t taken a single step to address it! Interestingly, for those who have a financial adviser, the story is different. Nine out of 10 (89%) of these adviser-client relationships have addressed the possibility of outliving savings.
Planning and discipline are vital. Partnering with an adviser can help people plan for the years ahead and any difficulties they may encounter.
4. Can you 'fill the gap'?
More than 42% of Americans can imagine a time when Social Security won’t exist, and many are depending on it to provide more than a quarter of their overall retirement funding. This number goes up for Boomers and down for Gen Z and Millennials, who have tempered their expectations for what Social Security will fund.
If Social Security does meaningfully change, how will retirees fund “the gap”? Planning ahead for this possibility can help Americans proactively prepare and not rely on a best-case scenario.
Americans have 1.27 million reasons to start planning for retirement, but it’s important to plan comprehensively. It’s one thing to accumulate and grow wealth; it’s another to protect it from risks like inflation, market volatility, healthcare costs and more.
That’s why I recommend gaining professional advice from a financial adviser who can help people develop a holistic plan that safeguards what they have built and creates future prosperity.
-
The Most Tax-Friendly States for Investing in 2025 (Hint: There Are Two)State Taxes Living in one of these places could lower your 2025 investment taxes — especially if you invest in real estate.
-
Want To Retire at 55? See If You Can Answer These Five QuestionsWho said you can’t retire at 55? If you say yes to these questions, you may be on your way to an early retirement.
-
Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on RetirementWhile some provisions might help, others could push you into a higher tax bracket and raise your costs. Be strategic about Roth conversions, charitable donations, estate tax plans and health care expenditures.
-
One Small Step for Your Money, One Giant Leap for RetirementSaving enough for retirement can sound as daunting as walking on the moon. But what would your future look like if you took one small step toward it this year?
-
This Is What You Really Need to Know About Medicare, From a Financial ExpertHealth care costs are a significant retirement expense, and Medicare offers essential but complex coverage that requires careful planning. Here's how to navigate Medicare's various parts, enrollment periods and income-based costs.
-
I'm a Financial Planner: Could Partial Retirement Be the Right Move for You?Many Americans close to retirement are questioning whether they should take the full leap into retirement or continue to work part-time.
-
From Mortgages to Taxes to Estates: How to Prepare for Falling Interest RatesAs speculation grows that the Federal Reserve will soon start lowering interest rates, now is a good time to review your financial plans for housing, estate, taxes, investing and retirement to make the most of potential changes.
-
This Is How Lottery Winners Build Lasting Legacies, From a Financial ProfessionalWinning a massive lottery jackpot, like the recent $1.4 billion Powerball, requires seeking immediate legal and financial counsel, protecting your identity and winnings and planning your legacy.
-
I'm an Investment Strategist: This Is How the Fed's Next Rate Move Could Impact Your WalletInterest rate cuts might be coming, which could affect everything from your credit card debt to your mortgage. It's smart to prepare now — here's how.
-
I'm a Retirement Planner: These Are Three Common Tax Mistakes You Could Be Making With Your InvestmentsDon't pay more tax on your investments than you need to. You can keep more money in your pocket (or for retirement) by avoiding these three common mistakes.
