The average American now believes they need $1.26 million to retire comfortably, according to the 2025 Planning & Progress Study by Northwestern Mutual. This is a decrease of $200,000 from last year’s estimate of $1.46 million. The change is attributed to lower inflation rates since the peak in the summer of 2022.
About half of the workforce now plans to delay retirement until at least age 65, with 39% not expecting to retire until age 70 or beyond, according to a report by the Transamerica Center for Retirement Studies. Given the uncertain economic landscape, diversifying investments beyond the typical 60% stocks and 40% bonds portfolio may be necessary. Options like gold IRAs and real estate funds, such as Homeshares, can help protect against market volatility and inflation.
Lower retirement expectation trends
In 2023, the average expenditure for households headed by individuals 65 years and older was $60,087 annually, according to the U.S. Bureau of Labor Statistics. Social Security benefits, averaging about $2,000 per month in April 2025, would cover $24,000 of this amount, leaving an additional $36,000 needed annually.
However, the Social Security trust fund is expected to run dry by 2033 unless Congress intervenes, which could result in a 23% reduction in benefits. Retirees and those nearing retirement can find ways to cut back on spending, such as reassessing home and car insurance policies to find better rates. Consulting a fiduciary financial advisor can help tailor a savings plan to individual needs and goals.
While the “magic number” for a comfortable retirement has decreased, it’s essential to stay informed and seek professional advice to navigate the complexities of retirement planning. Diversification and strategic financial planning can significantly impact retirement readiness and peace of mind.
