Retirement is about income, not a magic number
Many Americans believe they need more than $1.26 million to retire comfortably, according to a survey by Northwestern Mutual. But financial experts increasingly argue that retirement planning should focus less on hitting a single savings target and more on replacing income to maintain a desired lifestyle.
“Tempting as it is to put a single number on retirement, how much you need really depends on the life you expect to lead,” said Ben Storey, director of Retirement Research and Insights at Bank of America.
Income replacement changes the equation
This perspective is echoed in JPMorgan Asset Management’s 2025 Guide to Retirement, which suggests that many households can retire comfortably without becoming millionaires. The key variable is how much of a household’s pre-retirement income can be replaced through sources such as Social Security Administration benefits and employer-sponsored retirement plans.
For higher earners, the gap is larger. A household earning $300,000 annually may see only about 55 percent of its income replaced through these sources, making personal savings more critical. For households earning $125,000 or more, JPMorgan’s analysis suggests that a seven-figure nest egg may still be justified.
Lower and middle incomes need far less
For households earning below $90,000, the picture looks very different. JPMorgan estimates that these households can maintain a comparable lifestyle in retirement with a gross savings rate of around 5 percent, or roughly $4,500 per year.
That figure closely matches real-world behavior. Data from the Bureau of Economic Analysis shows the average personal savings rate stood at 4.7 percent in September. For households earning $100,000 or more, the model assumes a higher 10 percent annual savings rate.
Why $1 million is unrealistic for most
While the $1 million milestone has become a cultural benchmark, it remains out of reach for the majority of Americans. According to Investopedia, only 2.6 percent of Americans and 3.2 percent of retirees have saved $1 million or more.
JPMorgan’s income-replacement model paints a more attainable picture. A household earning $90,000 may need about $700,000 by age 65. For households earning $50,000, the estimated target drops to $350,000, while a $30,000 income points to a retirement goal closer to $175,000.
Planning matters more than perfection
Because retirement needs vary widely, many experts recommend working with a qualified financial advisor to tailor savings goals. Tools like budgeting and investment tracking apps can also help households monitor progress and adjust contributions over time.
Rather than chasing an arbitrary number, focusing on realistic income replacement can make retirement planning clearer, more achievable, and far less intimidating.
