Personal Finance

Americans in Their 50s Think They Need This Much to Retire Comfortably

Christy Bieber

Published: December 23, 2024 12:15 pm

Key Points from 24/7 Wall St.:

• Members of Gen X think they need $1.56 million saved for retirement.
• This could provide an annual income as high as $62,400. 
• Many people in their 50s are not on track to have that much invested. 
• Retiring early is possible, and may be easier than you think. Click here now to see if you’re ahead, or behind. (Sponsor)

It can be difficult to figure out exactly how much to save for a comfortable retirement. After all, the rules keep changing for how much you can safely withdraw, and there are ongoing concerns about how much income Social Security will provide with the program’s trust fund at risk.

Recently, though a survey from Northwestern Mutual revealed how much members of different generations think they’ll need invested for their later years. Based on this survey, here’s exactly how much Americans in their 50s anticipate needing when they quit work for good. 

Americans in their 50s expect to need a big nest egg for retirement security

According to Northwestern Mutual, GenXers believe they’ll need $1.56 million saved for retirement. This cohort, who are between the ages of 44 and 59, has set lower expectations for savings than their younger counterparts. Millennials estimate they’ll need $1.65 million and Gen Z expects to require $1.63 million.

For those who hit their target, the $1.56 million in retirement savings should produce around  $57,720 to $62,400 per year in annual income depending on whether you follow the 4% rule or the more conservative 3.7% rule.

The 4% rule is a longstanding rule of thumb that says retirement money should last 30 years if you take out 4% in year one and adjust for inflation each year — but experts now say 3.7% is a better bet to make sure your money lasts given more conservative estimates for future returns. 

When combined with Social Security, this level of income should provide a reasonably comfortable retirement for most GenXers. So, they aren’t selling themselves short despite not planning to save as much as younger generations.

Will Americans in their 50s hit their goal?

While most future retirees currently in their 50s should be in decent financial shape if they hit their $1.56 million saving goal, that’s a very big if.

The Northwestern Mutual study found that members of Gen X actually have just $108,600 currently saved toward their retirement. That leaves them with a gap of $1.45 million between their goal and their reality. 

Of course, since people in this age range aren’t retired yet, they still have time to save — but bridging the gap and catching up to their target number could be a real challenge. A 50-year-old with $108,600 saved today would need to invest $2,078.13 every month until age 67 to amass a $1.56 million nest egg, assuming a 10% average annual return.

While saving this much might be doable for some, it’s likely out of reach for most people.  While there are some ways to make it easier, including taking advantage of any employer matching funds and investing in tax-advantaged accounts like 401(k)s, investing almost $25,000 per year would be a big ask considering Capital One’s data pegs the median annual salary of those 45 to 54 at $68,432.

The good news is, while $1.56 million is a good goal to aspire to, it’s not necessarily the amount everyone needs. You can figure out your personalized number by working with a financial advisor or can take a simple shortcut and multiply your estimated final salary by 10 to get a rough idea of your savings needs.

Whatever you do, though, you should have a clear objective and should be working today toward accomplishing it because if you are in your 50s, retirement will be here before you know it.