Maybe we don’t all need $1 million to retire, after all

Maybe we don't all need $1 million to retire, after all

Revisiting the Financial Benchmark for Retirement

Maybe we don t all need 1 - Long-standing advice in retirement planning often suggests saving 10 times your annual income to secure a comfortable lifestyle. This conventional target, frequently cited as a “magic number,” typically implies accumulating over $1 million in savings for many individuals. However, recent data from real-world retirees challenges this notion, revealing that such goals might be inflated for most people.

The Transamerica Center for Retirement Studies, in its 2025 survey, found that the average household savings for retirees amounts to just $126,000. Surprisingly, other studies indicate that only about half of retirees have any formal retirement savings at all. These findings raise questions about whether the $1 million benchmark is a necessary milestone or an overestimated expectation.

Retirees Report Satisfaction Despite Lower Savings

Contrary to the financial anxiety often portrayed in media, a significant majority of retirees express contentment with their financial situation. For instance, an April Gallup poll revealed that 82% of retired individuals claim they have sufficient funds to live comfortably. Similarly, the 2025 federal Survey of Household Economics and Decisionmaking showed that 83% of Americans aged 60 and older rate their financial status as “living comfortably” or “doing okay.”

Andrew Biggs, a senior fellow at the American Enterprise Institute, highlights this disconnect. “If what you’re asking is, ‘Are we preparing sufficiently for retirement,’ all of these numbers say that we are,” he explains. Biggs previously gained attention for his 2023 Wall Street Journal column titled “You Don’t Need to Be a Millionaire to Retire,” where he argued that most Americans achieve retirement satisfaction with much less than the commonly cited figure.

Confidence in Financial Stability

Confidence among retirees in maintaining their quality of life also remains high. According to the Transamerica survey, 76% of retirees believe they can sustain a comfortable lifestyle without financial strain. Yet, this confidence may not fully account for unexpected challenges. Craig Copeland, director of wealth benefits research at the Employee Benefit Research Institute, notes that while retirees generally feel secure, the definition of “getting by” can vary significantly.

“Most retirees do seem to be getting by,” Copeland says. “But how we define ‘getting by’ becomes tricky.” This nuance underscores the idea that while many meet basic financial needs, they might still face vulnerabilities if unforeseen expenses arise. Catherine Collinson, CEO of the Transamerica Center, points out that nearly 50% of retirees rely on family and friends for long-term care, rather than professional services, highlighting a potential reliance on informal support networks.

The Reality of Retirement Savings

Despite the positive sentiments, the financial resilience of retirees is not absolute. In the Transamerica survey, only 56% of respondents believed they had built a sufficient nest egg for retirement. This lack of confidence aligns with the fact that approximately half of older Americans have retirement accounts, suggesting that even those who do save may feel uncertain about their adequacy.

Biggs emphasizes that the overemphasis on a “crisis” in retirement planning can distort perceptions. “Voices in the retirement industry and the news media overplay the notion of a retirement ‘crisis,’” he says. “They overstate the need for every family to bank seven-figure savings for a shot at a comfortable retirement.” His argument is supported by the National Retirement Risk Index, a tool developed by the Center for Retirement Research at Boston College, which estimates the percentage of workers at risk of not maintaining their standard of living in retirement.

Recent reports show the risk index fluctuating between 40% and 50% of workers. As of now, it stands at 39%, indicating that roughly two out of five individuals may struggle financially during retirement. This statistic, while sobering, does not negate the widespread satisfaction reported by retirees. Instead, it highlights the importance of tailoring financial plans to individual circumstances rather than relying on a one-size-fits-all approach.

Emergency Preparedness Among All Age Groups

Financial stability extends beyond retirement savings to include emergency preparedness. A recent Bankrate survey found that only 47% of Americans have enough cash on hand to cover a $1,000 unexpected expense. This gap in liquidity becomes more pronounced as people age, with younger adults facing greater challenges in building a safety net.

Interestingly, the same Survey of Household Economics and Decisionmaking reveals that the percentage of Americans reporting financial distress decreases with age. For example, 32% of those aged 35-44 say they are doing worse than “okay,” while this drops to just 12% for individuals 75 and older. This trend suggests that retirees, despite lower savings, may be better positioned to manage financial shocks compared to younger generations.

Biggs argues that this resilience reflects a broader shift in how Americans view retirement. “Retirees are more financially stable than younger Americans, as evidenced by their responses on surveys,” he observes. However, he also acknowledges that the $1 million target serves as a useful benchmark for some, even if it isn’t universally necessary. Anqi Chen, associate director of savings and household finance at the Center for Retirement Research, agrees. “I do agree that not everyone needs a million dollars,” she says. “That’s a very high number for some people, and not enough for others. That one number just doesn’t fit everyone.”

Ultimately, the financial wellbeing of retirees is a multifaceted issue. While many meet their basic needs and feel secure, the absence of robust emergency savings or unexpected healthcare costs can threaten their stability. These findings encourage a more personalized approach to retirement planning, one that recognizes individual differences and adapts to changing economic realities. As the data shows, a comfortable retirement may not always require a $1 million balance, but it does demand thoughtful preparation and flexibility in financial strategy.