The ‘magic number’ for retirement hits $1.45M

The “magic number” Americans believe they need to save for a comfortable retirement climbed to $1.46 million in 2026 – $200,000 more than last year and in line with 2024 estimates. This increase comes as 46% of Americans said that they don’t expect to be financially prepared for retirement, and nearly half believe it is somewhat or very likely that they will outlive their savings.

These are the latest findings from Northwestern Mutual's 2026 Planning & Progress Study, the company's proprietary research series that explores Americans' attitudes, behaviors and beliefs toward money, financial decision-making and the broader issues impacting long-term financial security.

“The new magic number reflects a convergence of factors – from persistent inflation and longer life expectancies to uncertainty about the future of Social Security,” said John Roberts, chief field officer at Northwestern Mutual. “Retirement is increasingly complex, and Americans are responding by setting higher expectations for what they’ll need. What matters now is pairing those expectations with a thoughtful, comprehensive financial plan that will enable them to reach their unique goals.”

While there is no universal retirement number, Northwestern Mutual recommends that people aim to replace around 80% of their pre-retirement income, the survey said. However, each person's retirement need depends on their individual goals and circumstances. These include when they want to retire, where they’ll live and the lifestyle they want to maintain throughout their retirement years.

Retirement preparedness among generations

Even as retirement target numbers climb, nearly a quarter of Americans with retirement savings said that they have just one year’s worth or less of their current annual income set aside for retirement. Members of Generation X, many of whom are nearing retirement, are the least confident in their retirement preparedness – but they have made some progress, according to the survey.

Nearly half of Gen Xers have at least four times or more of their current annual income saved – an improvement over the 41% who said the same last year. And nearly half of Gen Xers said that they expect to be financially prepared for retirement when the time comes, up slightly from 46% last year. However, one in five Gen Xers said that financial challenges or concerns have already caused them to delay retirement, the most of any generation surveyed.

Generation Z continues to be the most confident generation, the survey said, with 58% expecting to be financially prepared for retirement. However, that figure has declined from 63% in 2025.

Reasons for Gen Z’s high confidence level

What might be the reasons why Gen Z continues to be the most confident generation expecting to be financially ready for retirement? Gen Zers are starting to save much earlier than previous generations, said Alison Fyhrie, financial advisor with Northwestern Mutual. On average, they began saving at age 22, compared to age 31 for the average American and age 32 for Gen X. This early start gives them more time for potential market compounding before they reach their target retirement age.

This generation views retirement not necessarily as an end to work, but as a transition – 42% of Gen Z plan to work during their retirement years, primarily to stay stimulated (51%) or fund a specific lifestyle (43%), added Fyhrie. “Knowing they have the flexibility to supplement their income reduces the all-or-nothing pressure of a traditional retirement,” she said.

Gen Z is also showing a notable uptick in financial discipline, with many prioritizing homeownership as a wealth-building tool, added Fyhrie. “Fifty-four percent now believe owning a home is affordable for them, a significant increase from last year. This isn’t just youthful optimism. Gen Z seems focused on pursuing financial independence,” she said.

Benefits of working with an advisor

In addition, the survey shared some of the benefits of clients who work with an advisor. The survey noted that Americans with a financial advisor said that they plan to retire at age 63.7, on average, roughly two-and-a-half years sooner than Americans without an advisor (age 66.1). Moreover, nearly three in four Americans with an advisor (74%) believe they will be financially prepared for retirement when the time comes, and only 43% of Americans without an advisor agree.

“These figures paint a picture of retirement that may stretch 30 to 40 years or longer,” said Roberts. “As people plan to live longer, their money needs to work longer, too. Planning for longevity isn’t just about accumulating more – it’s about building a strategy that can sustain income, manage risk and adapt over time. That’s where professional guidance from a trusted advisor can make a significant difference.”

Helping clients build a sustainable strategy

Financial professionals can take several steps to help their clients build a strategy that can sustain their income, manage risk and adapt over time.  According to Fyhrie, a sustainable strategy begins with clarity. “By finding that sweet spot between your spending and saving, you're able to live more in the moment while still having confidence in the future,” she said. “That goes for anyone, regardless of age. Rather than viewing ‘sustained income’ as a single goal, it’s helpful to categorize your income based on your needs.”

In this way, Fyhrie added, “if something unforeseen arises, you can cut back strategically on some of your more discretionary expenses.” Covering bills and planning for retirement are essential, she said. Enjoying life along the way with discretionary income matters, too.

“You may also want to think about your future growth and legacy,” added Fyhrie. “This could include charitable contributions or, for younger clients, saving for future education costs or career pivots. By tiering these goals, you can align specific assets with the appropriate long-term or short-term risk profile for each need.”

Fyhrie said that she always reminds clients that the only constant is change, whether in tax laws, market conditions or personal circumstances. “I work with clients to create a plan that allows them to be nimble, and no matter what circumstances arise, we want to be well-positioned to navigate them with a well-rounded, diversified plan. A good financial plan helps protect against the ‘what-ifs’ in life and allows you to rebound quicker if you find yourself facing a setback,” she added.

A solid, holistic financial plan will often focus on diversification with a balance of assets that allow for growth and stability, she added. “Making sure those well-diversified assets are also tax-efficient is important too.”

Finally, Fyhrie said, “Integrating things such as disability, life or long-term care insurance can help safeguard your overall plan from unforeseen circumstances.”

The 2026 Planning & Progress Study was conducted by The Harris Poll on behalf of Northwestern Mutual among 4,375 U.S. adults aged 18 or older. The survey was conducted online between January 5 and January 21, 2026.

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