How Much Money You Really Need for a Comfortable Retirement, Says Forbes

The Magic Number Has Shifted in 2025

According to Northwestern Mutual’s 2025 Planning & Progress Study, Americans now believe they need $1.26 million to retire comfortably, which is $200,000 less than the all-time high $1.46 million reported in 2024. This drop might feel reassuring at first glance. Yet here’s the thing: the gap between what people think they need and what they’ve actually saved remains enormous. Among Americans who have retirement savings, one in four say they have just one year or less of their current annual income put aside for retirement. So while the target dropped slightly, it’s still a towering mountain for most folks.

Wes Moss, an Atlanta-based certified financial planner writing for Forbes, assumed a target of $1.25 million in liquid retirement savings, adjusted for inflation. His calculations are based on realistic investment returns and time horizons that matter for everyday Americans. A 40-year-old with no investments would need to save about $1,425 per month to build savings of $1.25 million by age 65. That’s a hefty monthly commitment, but it’s doable if you start now rather than later.

What The Average American Actually Has Saved

Let’s be real: most people are nowhere near retirement ready. The average retirement savings for all families is $333,940, but the median retirement savings is just $87,000. That massive difference shows how a few wealthy households skew the average upward, while the typical American family has far less tucked away.

Of the 54.3% of U.S. households that have any money in retirement accounts, only about 5% have $1,000,000 or more in retirement savings. Think about that for a second. More than half of all households haven’t saved anything for retirement in dedicated accounts. Nearly 2 in 5 Americans said “not having enough saved for retirement” was a financial concern in an April 2025 NerdWallet survey. The anxiety is real, and honestly, it’s justified for many people.

Time Is Your Most Valuable Asset

The Forbes article showed required annual savings needed to achieve the $1.25 million threshold, ranging from more than $86,000 per year on a 10-year timeline to about $11,000 on a 30-year timeline. The math is brutal if you wait too long. Starting early makes an incredible difference because compound growth does the heavy lifting for you over decades.

Individuals starting at age 20 would need to invest $330 per month to reach $1.26 million by age 65, while those starting at age 30 would need to set aside $695 per month, assuming a 7% rate of return compounded daily. Wait until you’re 50? You’d need to invest $3,958 per month. The longer you delay, the more painful the catch-up becomes.

How Much Income You’ll Actually Need

In 2025, financial experts generally recommend having a retirement fund that can replace 70-90% of your pre-retirement income. This isn’t just a random range pulled from thin air. It accounts for the fact that certain expenses drop in retirement while others increase. For someone earning $120,000 annually before retirement, this threshold means needing between $90,000 and $102,000 per year in retirement, or about $7,500 to $8,500 in monthly retirement income.

The average retirement income in the United States in 2025 for individuals is approximately $60,000 per year, but the median retirement income is closer to $47,000 annually, or around $3,900 per month. That’s significantly less than what experts recommend for maintaining your lifestyle. Social Security provides a base layer of income with the average monthly payment at $1,976 for 2025, but most households need additional income streams to bridge the gap.

Making Your Retirement Money Last

For people already in retirement and actively spending from portfolios, a 3.7% safe withdrawal rate is the base case, assuming a 30-year time horizon with a 90% probability of not running out of money. This is lower than the famous 4% rule that’s been circulating for years. Markets have changed, life expectancies have increased, and investment returns face different headwinds now.

More than half of Americans believe outliving their life savings is a real possibility, and the vast majority are living with financial anxiety. It’s not paranoia. Social Security recipients received a 2.5% cost-of-living adjustment in 2025, down from 3.2% in 2024, and these COLAs often fail to keep pace with real inflation, especially after factoring in rising Medicare Part B premiums. Inflation quietly erodes purchasing power year after year, making planning even more critical.