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$1.46 million? $3 million? Financial experts say there’s no such thing as a single ‘magic’ retirement number

The latest “magic” retirement number is $1.46 million, according to Northwestern Mutual’s 2024 Planning and Progress Study. That figure has been circulating in the financial press for the past week, engendering conversation—and some dismay—online.

But financial advisors say there’s no magic number that guarantees a comfortable retirement for all. Such figures can be used as general benchmarks, but every person’s actual magic number should be, well, personalized.

“Everyone’s number is unique to them, their lifestyle, their risk profile, how long they expect to live, the type of assets available to them, and goals they either need to fund or want to fund during retirement,” says Tricia Rosen, a Massachusetts-based certified financial planner (CFP).

And, truth be told, most people in the U.S. don’t retire with $1.46 million in savings, assuming they retire at all. Many—those with low expenses or pensions—won’t need that much, says Ashley Ritterhaus, a Massachusetts-based CFP and founder of Curious Crow Financial Planning, but some will need more.

“While magic numbers can be motivating to some, they can have a negative impact on others,” says Ritterhaus. “Someone who hasn’t yet started saving for retirement may not want to even try if they think the $1.46 million goal is way beyond their reach. Someone who needs to save much more than the magic number to support their lifestyle may end up under-saving if they use it as a benchmark.”

What Northwestern Mutual’s study, which has been published annually since 2012, does show, says Andrew Herzog, a Texas-based CFP, is that “inflationary expectations are front-of-mind for Americans.” In the past four years, the magic retirement figure reported in the study has increased by 53%, from $951,000 to $1.46 million.

“Americans are feeling that retirement is going to require more capital,” says Herzog.

It also underlines Americans’ growing doubts about the long-term viability of Social Security, he says. Though fears about Social Security disappearing completely are likely overblown, it’s possible future retirees won’t be able to count on such generous benefits. That has people, particularly members of younger generations, rethinking their retirement savings goals.

“Being given a number gives people a feeling of clarity,” says Rosen. There’s nothing wrong with having something to aim for, as long as savers also have an understanding that it may fluctuate over time, and that it’s just half of the retirement equation—the other half being expenses.

To determine your magic figure, Herzog suggests using the 4% rule. This represents the annual withdrawal rate you should take from your retirement accounts. So if your expected expenses in retirement amount to, say, $70,000 per year, you would divide that by 4%. The result is $1.75 million.

Most important, advisors say, don’t let the thought of amassing a large figure like $1.46 million get you down. Start saving and investing what you can, and increase it over time.

“$1.46 million is an arbitrary number for most Americans,” says Charles Curry, a Florida-based CFP. “I have had clients that sat down with me to do a financial plan realized their magic retirement number was less than they thought because of their lifestyle and living within their means.”

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