One of the hardest things about financial matters in the U.S. is still planning for retirement. New research shows that Americans think they'll need a little less money than they did last year to retire comfortably. But the truth is that almost no one is even close to that number, as per a report by Money Wise.
According to the most recent Planning & Progress study, the average American thinks they will need $1.26 million to retire comfortably in 2025. That's about $200,000 less than the goal from last year, but most people will still not be able to reach it. There are currently only 7.9 million millionaires in the United States, which is only 2.3% of the population.
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But savings gaps are still a big problem because almost 97% fall short. Costs are going up, people aren't saving much, and they depend on short-term spending, which makes retirement security impossible, as per a report by Money Wise.
It's easy to see why. It is hard to consistently save money because of rising housing costs, inflation, and student loan debt. According to data from the Federal Reserve, the average American only saved 4.5% of their extra money in June 2024. Many people aren't ready for retirement as they get closer because of this gap.
Do little habits really make a difference?
Even small plans to save money can build momentum. For example, apps that turn small amounts of money spent on everyday things into investments can help turn spare change into long-term growth. Saving $2.50 a day adds up to almost $900 a year, and that's before interest is added on top of that. It's important to be consistent. Making regular contributions over time can help savers get closer to that seven-figure goal, as per a report by Money Wise.
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Aside from basic savings, people are also interested in real estate and art as alternative assets. These investments, like fractional home equity funds and platforms that make investing in art easy, offer variety and the chance to make money that aren't available in traditional stock markets. These strategies can help accredited investors get long-term growth with less risk, as per a report by Money Wise.
The average amount to "retire comfortably" is $1.26 million, but the exact amount needed depends on the person and their location. Millionaires who spend $200,000 a year might still not have enough money. People who live in states with lower costs of living, like Alaska or New Hampshire, might need less, as per a report by Money Wise.
Importantly, having a lot of money does not mean you are ready. Northwestern Mutual says that two-thirds of millionaires still don't think of themselves as "wealthy," and many of them say they don't do enough to plan their finances. Instead of relying on a single number, using a retirement calculator or talking to a fiduciary advisor can help you set goals that are reasonable and fit your needs.
In the end, the million-dollar mark may be the standard, but most Americans still can't reach it. Since only 2.3% of people become millionaires, getting to a comfortable retirement requires investing early, saving regularly, and spreading your money around in smart ways. That first step, taken early on, can make all the difference, as per a report by Money Wise.
How much do people in the US think they'll need to retire in 2025?
Reportedly, $1.26 million is needed to retire in 2025.
How many people in the United States are actually millionaires?
Only 2.3% of adults meet this criteria.
Why do most Americans miss the mark for retirement?
According to the most recent Planning & Progress study, the average American thinks they will need $1.26 million to retire comfortably in 2025. That's about $200,000 less than the goal from last year, but most people will still not be able to reach it. There are currently only 7.9 million millionaires in the United States, which is only 2.3% of the population.
ALSO READ: Southwest Airlines’ new seating policy raises concerns for plus-size travelers
But savings gaps are still a big problem because almost 97% fall short. Costs are going up, people aren't saving much, and they depend on short-term spending, which makes retirement security impossible, as per a report by Money Wise.
It's easy to see why. It is hard to consistently save money because of rising housing costs, inflation, and student loan debt. According to data from the Federal Reserve, the average American only saved 4.5% of their extra money in June 2024. Many people aren't ready for retirement as they get closer because of this gap.
Do little habits really make a difference?
Even small plans to save money can build momentum. For example, apps that turn small amounts of money spent on everyday things into investments can help turn spare change into long-term growth. Saving $2.50 a day adds up to almost $900 a year, and that's before interest is added on top of that. It's important to be consistent. Making regular contributions over time can help savers get closer to that seven-figure goal, as per a report by Money Wise.
ALSO READ: Apple’s iPhone 17 & 17 Pro release date schedule heat up — here’s the latest scoop
Aside from basic savings, people are also interested in real estate and art as alternative assets. These investments, like fractional home equity funds and platforms that make investing in art easy, offer variety and the chance to make money that aren't available in traditional stock markets. These strategies can help accredited investors get long-term growth with less risk, as per a report by Money Wise.
How much do you really need for old age?
The average amount to "retire comfortably" is $1.26 million, but the exact amount needed depends on the person and their location. Millionaires who spend $200,000 a year might still not have enough money. People who live in states with lower costs of living, like Alaska or New Hampshire, might need less, as per a report by Money Wise.
Importantly, having a lot of money does not mean you are ready. Northwestern Mutual says that two-thirds of millionaires still don't think of themselves as "wealthy," and many of them say they don't do enough to plan their finances. Instead of relying on a single number, using a retirement calculator or talking to a fiduciary advisor can help you set goals that are reasonable and fit your needs.
In the end, the million-dollar mark may be the standard, but most Americans still can't reach it. Since only 2.3% of people become millionaires, getting to a comfortable retirement requires investing early, saving regularly, and spreading your money around in smart ways. That first step, taken early on, can make all the difference, as per a report by Money Wise.
FAQs
How much do people in the US think they'll need to retire in 2025?
Reportedly, $1.26 million is needed to retire in 2025.
How many people in the United States are actually millionaires?
Only 2.3% of adults meet this criteria.
