Many Americans plan to retire at age 65. Many of them will live to age 90. Between those two dates sit roughly 25 years of expenses with no paycheck coming in.
Social Security was designed to replace about 40% of pre-retirement income. Most financial advisers put the real target at 70% to 80%.
Americans have a number in mind for what it costs to cover the rest, and it just hit a record high.
What’s the new retirement savings goal?
Northwestern Mutual’s 2026 Planning & Progress Study puts it at $1.46 million, as Yahoo Finance reported, up $200,000 from last year. That matches the all-time high set in 2024. Respondents cited inflation, rising healthcare costs, longer lifespans, and Social Security uncertainty as the main drivers.
The 25x rule explains where the number comes from. Multiply expected annual spending by 25. At $58,000 a year, the math lands at $1.45 million. A separate rule of thumb holds that every $300,000 saved produces roughly $1,000 a month in retirement income.
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The 4% rule works differently. Withdraw 4% of savings in year one and adjust for inflation each year after. The rule was built to survive a 30-year retirement with a balanced portfolio.
Some researchers have argued that a lower withdrawal rate is safer, given today’s market valuations and longer life expectancies. None of the formulas account for a market crash in the first years of retirement, a run of higher-than-expected inflation, or a medical bill that lands all at once.
How confident Americans are about retirement
Almost half (46%) of U.S. adults say they will not be financially ready to retire when the time comes. Another 48% say they will probably outlive their savings.
The average expected retirement age is 65. At that age, a retiree in good health may have 25 to 30 years of expenses left to cover.
Gen X is the most anxious generation in the survey. Half said they fear running out of money. One-fifth have already pushed back their retirement date for financial reasons. The oldest Gen Xers are now in their late 50s.
In addition, 41% of all respondents said they plan to keep working after retirement. That includes half of Millennials and half of Gen Xers. Nearly half of those expecting to work said they will do it out of necessity, not choice.
What a $1.46 million retirement nest egg actually buys
Retirement savings of $1.46 million go further in Boise than they do in Boston. Rent, property taxes, and supplemental health insurance premiums all vary by state and city. Some states tax Social Security income, while others do not.
A retiree who planned their finances in one city and ends up spending retirement in another faces a completely different set of numbers. The survey figure does not tell anyone whether they are personally on track. It tells them what the average American thinks they need.
Fidelity estimates the average retiree spends about 15% of retirement income on healthcare costs Medicare does not cover. Long-term care adds to that. Assisted living runs $5,000 to $7,000 a month in most U.S. markets. Skilled nursing facilities cost more. Medicare covers very little of either.
The IRS set the 401(k) contribution limit at $24,500 for 2026. Workers age 50 and older can add another $8,000 in catch-up contributions, for a total of $32,500 per year.
A health savings account is a separate tool. Contributions go in pre-tax, the balance grows without being taxed, and withdrawals for medical expenses come out tax-free.
Unused funds do not expire at year-end. They carry forward, earn interest, and can be invested, making an HSA one of the few accounts that is triple tax-advantaged.
One in three Americans say Social Security uncertainty is one of their biggest retirement worries.
How to turn retirement savings into income that lasts
Saving $1.46 million and converting it into 30 years of income are two separate problems.
Sequence of returns is the bigger challenge most people have not heard of. A large loss in the first years of retirement, while withdrawals are still going out, leaves fewer dollars invested to recover when markets bounce back. The same loss absorbed a decade later, with far fewer withdrawal years still ahead, does much less damage.
Keeping two or three years of expenses in cash or short-term bonds means a market drop does not force a sale of long-term investments at the worst time. Spreading savings across asset classes limits the damage when one sector falls hard.
Workers within a decade of retirement who have not yet sorted out when to claim Social Security are leaving money unclaimed. Monthly benefits go up each year a worker delays past full retirement age, with the largest possible check available at age 70.
Why Social Security timing changes the math
One in three Americans says Social Security uncertainty is one of their biggest retirement worries, the Northwestern Mutual study found. Monthly benefits rise for every year a worker delays claiming past full retirement age. The highest possible payment is available at age 70.
Workers born in 1960 or later hit full retirement age at 67, so claiming at 62 locks in a permanent monthly reduction of up to 30%.
More than a quarter (27%) of survey respondents said they think they could live to age 100. A 65-year-old who reaches 100 needs savings to last 35 years. Most retirement plans are built for 20 to 25.
The difference has to come from somewhere, and for most people, it comes from Social Security or from nothing.
Related: New Social Security bill seeks to lower retirement age
