Personal Finance

The Average Baby Boomer Says They Need Less Than $1 Million to Retire Comfortably

Ian Cooper

Published: November 29, 2024 11:38 am

The average baby boomer says they only need about $990,000 to retire comfortably.

That’s according to a 2024 Planning and Progress Study by Northwestern Mutual.

Key Points About This Article

•  The average baby boomer says they only need about $990,000 to retire comfortably.
• There’s still time to add to your nest egg to ensure the best retirement possible.
• Also: Take this quiz to see if you’re on track to retire ^(Sponsored)

That’s comparable to the average $1.46 million all generations believe they’ll need, which breaks down to $1.63 million (Gen Z), $1.65 million (Millennials), $1.56 million (Gen X), $990,000 (Baby Boomers), and $3.93 million (High Net Worth individuals).

Unfortunately, there’s also a massive gap between what has been saved and what generations think they’ll need. For example, according to the study, the average person has saved $88,400 (not a typo), which is $1.37 million from where the average person wants to be.

In addition, “The 2024 Planning & Progress Study found that among generations closest to retirement, just half of Boomers+ (49%) and Gen X (48%) believe they will be financially prepared when the time comes. On average, Gen X believes there is a 42% chance they could outlive their savings, while Boomers+ put the probability at 37%. Across both generations, more than a third (37% and 38%, respectively) have not taken any steps to address the possibility of outliving their savings.”

That’s not great at all.

Fortunately, there’s still time to add to your nest egg.

If you want to retire, save, budget, maximize retirement plans (especially with employer matches).

There are several things you can do now to catch up. For one, you can maximize your 401(k), and if you don’t have one set up, or you work for yourself, talk to your company’s financial administrator or your advisor. If you do work for yourself, you can always set up a Solo 401(k).

First, if you have an employer that will match your 401(k), maximize your contributions up to the amount your employer will match. If your employer will match up to 6% of your salary, maximize that. So, if you earn $75,000 a year, and you contribute 1%, that’s $750 for retirement. If your employer matches that, you have $1,500 for retirement per year. If you contribute 6% and your employer matches that, that’s about $6,750 in retirement per year.

Second, you can invest in a traditional IRA, for example. While it’s best to check with your financial advisor, many times you can deduct contributions on your tax return.

Also, what does your ideal retirement look like? Develop a clear idea of why you want to retire.

Plus, you need to consider how much you need to spend every year on rent or mortgage, healthcare and long-term costs, groceries, medication, transportation costs, or even pet expenses. Plus, do you expect to travel a lot, and how much do you foresee spending? Maybe you have plans to help your children, and even their children with things such as college tuition.

In short, if you fail to plan, retirement could become much farther off.