The cost of retirement for Americans is on the rise, with the average individual estimating they will need around $1.46 million to live comfortably during their post-work years, according to a report by Northwestern Mutual’s 2024 Planning and Progress study. This figure represents a 15% increase from last year’s $1.27 million and a 53% increase from the $951,000 goal in 2020. Younger generations, such as Gen Z and millennials, anticipate needing even more for retirement, with Gen Z estimating around $1.63 million and millennials expecting $1.65 million.
To put this into perspective, CNBC calculated how much someone who earns $50,000 annually should set aside each month to retire with $1.46 million at age 65. The calculations assume no initial savings and do not account for unpredictable life events such as raises, promotions, layoffs, or market volatility. For example, if you start saving at 21 years old and earn a 5% annual rate of return, you would need to save $759 per month. If you start at 25 years old, you would need to save $957 per month, and if you start at 30 years old, you would need to save $1,285 per month.
While having a savings goal in mind can be helpful when planning for retirement, it can also feel overwhelming if you’re a long way off from reaching that number. It’s important to focus on the things within your control, such as your savings rate, which is the percentage of your annual income you set aside for retirement each year. Fidelity Investments recommends a savings rate of 15%, inclusive of your employer’s match if available.
Starting to save for retirement as early as possible is crucial, as the money you save will have more time to grow for a longer period. Anne Lester, a retirement expert and author, emphasizes the importance of starting young, stating that it’s a powerful thing to do because the money will have more time to grow for a longer amount of time.
