It’s one of the toughest questions facing federal employees…
How much money do I need to retire?
Answer: It really does depend.
There is a historic and persistent gap between the amount of money savers are putting away and the amount they will need to live the lives they envision in retirement. This year, however, it appears many Americans are scaling back their expectations.
According to a recent survey, the “magic amount” American workers think they should set aside to retire comfortably in 2025 is $1.26 million,¹ $200K less than the $1.46 million reported last year and nearly flat with 2022 and 2023 indicators.
However, among Americans who have retirement savings, one in four (25%) report that they have set aside only one year (or less) of their current annual income as part of an intentional retirement savings plan.
More than half (51%) of the survey respondents also think it is somewhat or very likely they will outlive their savings. In contrast, only 16% felt confident enough to indicate that it’s “very unlikely” that they will outlive their wealth. Meanwhile, more than a third (35%) indicated that they have not taken any steps to plan for financial retirement readiness.¹
Interestingly, and important to also consider, over the past few years, the “magic amount” for the average U.S. worker to set aside surged 53% from $951,000 as reported in 2020 to $1.46 million as indicated in 2024.
Contributors to the less aggressive retirement savings goal compared to last year’s reported numbers point to cooling inflation. According to the survey, the economic climate has tempered workers’ expectations for their financial needs in retirement. In fact, since climbing to a pandemic peak of 9.1% in June 2022, inflation has gradually eased, dropping last month to 2.4% annually.
Obviously, the amount of money you’ll need for retirement is influenced by a wide range of factors, and certainly not just inflation. Your financial plan depends on many variables including where you live and your intended standard of living in retirement, whether you carry a mortgage on your home, how much remains on the balance, and how much your anticipated annual property insurance premiums will. The list of considerations is extensive, and I urge you to be intentional and proactively seek information and guidance to understand the many dependencies that will influence your “magic amount.”
What’s your “magic amount” for living the life you want after you quit working?
Planning and saving for retirement are arguably the most crucial steps you can take to ensure a comfortable and worry-free retirement. In the end, it’s really all about the numbers and determining your goals based on your very specific circumstances.
When you “run your numbers,” you will gain clarity and be in a position to take proactive steps to achieve your desired retirement lifestyle. This process requires careful consideration and adjustments along the way. And it requires you to make it a priority.
Remember, your financial journey is unique, so focus on making decisions that align with your personal goals and priorities.
Source: ¹2025 Planning & Progress Study, Northwestern Mutual
About Chris Kowalik
Chris Kowalik is a federal retirement expert and frequent speaker to federal employee groups nationwide. In her highly-acclaimed FedImpact Workshops, the FedImpact Podcast, and the FedImpact Webinars, she empowers employees to make confident decisions as they plan for the days when they no longer have to work. Chris’ candid and straightforward nature allows employees to get the answers they need and understand the impact these decisions have on their retirement.
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