Are Americans on Track for Retirement—or Just Hoping for the Best?
We all know that retirement planning is important, but for many Americans, it’s become a looming question mark: How much do I actually need? New research shows that while people are more aware than ever of the rising cost of retirement, most are still underprepared. Let’s break down the numbers—and the reality.
How Much Do People Think They’ll Need?
According to the 2024 Planning & Progress Study by Northwestern Mutual, Americans believe they’ll need about $1.27 million to retire comfortably. That’s down slightly from $1.46 million the previous year—perhaps reflecting shifting expectations or economic uncertainty. (Northwestern Mutual, 2024)
But how much are people actually saving?
The Federal Reserve’s latest Survey of Consumer Finances reports that the median retirement savings for households approaching retirement (ages 55–64) is just $185,000.
Younger Americans have even further to go. People under 35 have a median of only $18,880 saved for retirement. (Federal Reserve, 2023)
That’s a massive gap between perceived need and actual savings—and it highlights why retirement anxiety is so common.
Generational Divide: Who’s More Prepared?
Each generation views retirement differently—both in terms of goals and preparation.
🔹 Gen Z & Millennials
Northwestern Mutual found that Gen Z and Millennials expect to need between $1.6 and $1.7 million to retire. They’re thinking ahead—but they’re also facing higher student debt, lower homeownership rates, and rising costs of living. Despite these challenges, many are starting to invest earlier than their parents did.
🔹 Gen X
Often referred to as the “sandwich generation,” Gen X is dealing with college costs for their kids while supporting aging parents. As a result, their savings often take a hit. According to the Transamerica Center for Retirement Studies, nearly 4 in 10 Gen Xers say they expect to work past age 70 or never retire at all. (TCRS, 2024)
🔹 Boomers
Baby Boomers are closest to retirement, and many are already living on a fixed income. The same Transamerica study found that only 28% of Boomers have a written financial strategy for retirement—even though many are within a decade (or less) of leaving the workforce.
Will Retirement Savings Last?
People are living longer than ever—which is both a gift and a challenge. The Social Security Administration estimates that a 65-year-old today has a nearly 1 in 3 chance of living past age 90, and a 1 in 7 chance of living past 95. (SSA, 2023)
Unfortunately, many retirement plans haven’t adjusted for this longevity.
A 2024 Pew Trusts report revealed that 51% of Americans are worried about outliving their savings.
Just 34% say they’ve factored life expectancy into their retirement planning. (Pew Trusts, 2024)
Relying on Social Security alone likely won’t cut it. The average monthly benefit in 2024 is about $1,907—or just over $22,800 per year. That’s well below the income needed to maintain a middle-class lifestyle in retirement. (SSA, 2024)
The Cost of Waiting: Why Early Planning Matters
Let’s say you want to reach that $1.27 million target by age 65. If you start saving at:
Age 30: You’d need to invest about $330/month assuming a 7% annual return.
Age 40: You’d need to save $700+/month to hit the same target.
Age 50: That monthly number jumps to over $1,600/month. (Schwab Retirement Calculator)
The earlier you start, the more time compound interest has to work in your favor. And yet, a Bankrate survey found that 22% of Americans haven’t saved anything for retirement. (Bankrate, 2024)
Tax Efficiency: The Secret Weapon for Retirement Income
It’s not just about how much you save—it’s also about how you access it.
Only about 30% of Americans say they have a strategy to minimize taxes in retirement, according to Northwestern Mutual’s survey. But failing to plan can cost you thousands over time.
Some smart strategies include:
✔️ Tax-diversified accounts – A mix of pre-tax (401(k), IRA), after-tax (brokerage), and tax-free (Roth IRA, IUL, HSA) buckets gives you flexibility.
✔️ Roth conversions – Especially useful during lower-income years or before RMDs kick in at age 73.
✔️ Strategic withdrawal order – Tapping taxable accounts first may allow tax-deferred investments more time to grow.
✔️ Health Savings Accounts (HSAs) – One of the only triple tax-advantaged tools available: contributions are tax-deductible, growth is tax-free, and qualified withdrawals are also tax-free. (Fidelity, 2023)
A holistic retirement plan includes both growth and efficiency.
Financial Freedom Starts with Clarity
The gap between what Americans think they’ll need for retirement and what they’ve actually saved is significant—but not insurmountable. Whether you're in your 20s or your 50s, it’s never too late to build a strategy that puts you in control of your financial future.
Understanding your income goals, planning for longevity, and making smart tax decisions can make all the difference in whether your retirement feels secure or uncertain.
Need Help Creating a Plan That Works for You?
If you want to take the guesswork out of retirement planning and build a future rooted in clarity, let’s connect. I help individuals and families align their financial strategy with their goals and values—without relying solely on guesswork or generic advice.
Sources:
Northwestern Mutual, “Planning & Progress Study 2024.” https://news.northwesternmutual.com
Federal Reserve, “Survey of Consumer Finances 2022.” https://www.federalreserve.gov/publications/files/scf22.pdf
Pew Trusts, “Millions Falling Behind on Retirement.” https://www.pewtrusts.org
Transamerica Center for Retirement Studies, “20th Annual Survey.” https://www.transamericacenter.org/research
Social Security Administration, Retirement Planner. https://www.ssa.gov
Bankrate, “22% of Americans Have No Retirement Savings.” https://www.bankrate.com
Schwab, “Retirement Savings Calculator.” https://www.schwab.com
Fidelity, “Health Care and Retirement Costs.” https://www.fidelity.com
