Here’s How Much Workers Say They Need for a Comfortable Retirement

Employees say they need more money saved for their retirement at the same time a growing number of workers are considering lowering 401(k) contributions or withdrawing funds as financial anxiety jumps. 

Americans’ so-called magic number to retire comfortably in 2026 climbed to $1.46 million — a $200,000 jump from last year, according to new figures out from Northwestern Mutual. For those with $1 million or more in investable assets, the magic number is even higher, at $2.67 million. 

The new magic number reflects a convergence of factors, said Dan Guhl, private wealth adviser at Northwestern Mutual and partner at Prescient Financial Solutions in Milwaukee, from persistent inflation and longer life expectancies to uncertainty about the future of Social Security. 

More recently, retirement account balances have been hit by market volatility and the effects of the Iran war. Employee financial confidence dropped to the lowest level in years, according to recent data from insurance firm MetLife, with other data finding that employees are lowering their contributions and more are taking hardship withdrawals from their 401(k)s. The Northwestern Mutual survey of 4,375 U.S. adults, however, does not factor those other developments into account as the survey was conducted in January. 

Given all these factors, “it’s not surprising people are aiming higher,” Guhl said. “These concerns are reshaping expectations about retirement.” 

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How Far Away Are Employees? 

While a variety of factors that are affecting employees’ retirement are in flux, one big finding about the state of retirement remains consistent: The amount that U.S. workers think they need to save for their post-work years is still much higher than what they actually have saved. 

Nearly half of Americans (46%) don’t expect to be financially prepared for retirement, and nearly half (48%) believe it is somewhat or very likely they will outlive their savings. 

And, even as retirement targets climb, Northwestern Mutual found, just 23% of those with retirement savings say they have just one year or less of their current annual income set aside for it. 

Gen X employees, many of whom are nearing retirement, are the least confident in their retirement preparedness, Northwestern Mutual found, but they have made some progress. Nearly half (49%) of Gen Xers have at least four times their current annual income or more saved, an improvement over the 41% who said the same last year. And nearly half (49%) of Gen Xers say they expect to be financially prepared for retirement when the time comes, up slightly from 46% last year. However, one in five Gen Xers (20%) say financial challenges or concerns have already caused them to delay retirement, the most of any generation surveyed. 

Gen Z is the most confident generation, with 58% expecting to be financially prepared for retirement, though that figure has declined from 63% in 2025. 

Although the magic number is a general rule of thumb and retirement should be tailored based on individuals’ needs and situations, experts said, the fact that employees are generally far away from that figure indicates that there is much more they can do to improve their retirement efforts.   

Employer Support 

Experts said company and HR leaders can do more to bolster retirement programs and help employees understand — and improve — their savings efforts. 

“Retirement readiness is a workforce issue, and this is a clear call to action for employers,” Guhl said, adding when employees fall behind, retirements get delayed, financial stress rises, and organizational outcomes can suffer. 

“We have got to get employees to start early with savings and prioritizing their retirement,” said Richard Reed, vice president and 401(k) expert at benefits and HR consulting firm Segal in Boston. “And we need to focus on financial literacy — if people aren’t understanding what they need to do regarding finances, they won’t do it.” 

Guhl added that employers should strengthen plan design by adopting meaningful automatic enrollment and auto-escalation, offering competitive matches that incentivize higher saving, and providing both Roth and traditional options. “They should take steps to reduce leakage, such as educating employees about the long-term cost of loans and cash-outs and offering coaching before hardship withdrawals,” he explained. 

Better communication and guidance is another important piece of the puzzle, Reed said. “Communication is vital. You can have the best [retirement] program in the world, even the most generous program in the world. But if [employees] don’t understand it, or they can’t contribute, or you’re not paying them enough, in a sense, to benefit from it or take advantage of it, then what good is it?”