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According to the 2025 Northwestern Mutual Planning & Progress study, the average American now believes they need $1.26 million to retire. That’s $200,000 less than they said they needed last year, and nearly the same as the figure quoted in 2022.
The fact that the target hasn’t moved much in the last three years hasn’t made retirement any more accessible, however. The vast majority of U.S. adults are still falling short of this benchmark and could be hurtling towards a challenging retirement.
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Here’s why, and what you can do to help yourself reach that goalpost figure.
Although most Americans agree that they need to enter the seven-figure club to retire comfortably, only a small fraction of the population has actually achieved this target.
As of 2024, the U.S. was home to 7.9 million millionaires, according to Capgemini Research. That’s roughly 2.3% of the country’s total adult population, which means that almost 97% of Americans haven’t yet reached millionaire status. Keep in mind, that figure includes people of all ages and wealth levels, not just those nearing retirement.
Several factors contribute to this shortfall. While some Americans may not prioritize retirement savings, many face barriers that make it difficult to set aside money, including rising housing costs, student loan debt and inflation. The average American saved only 4.5% of their disposable personal income in June, according to the Federal Reserve Bank of St. Louis.
To counteract these factors, starting with small, daily habits can make a big difference over time.
With Acorns, every purchase you make with a linked debit or credit card is automatically rounded up to the nearest dollar. The excess — coins that would otherwise wind up in your pocket if you were paying cash — goes into a smart investment portfolio tailored to your appetite for risk.
Here’s an example of how that pans out. If you purchased a doughnut for $2.30, Acorns would round it up to $3.00 before you’ve even licked the sugar off your fingers, while automatically investing the 70-cent difference on your behalf.
That can add up fast. $2.50 worth of daily round-ups amounts to $900 per year — and that’s before your savings earn money and compound returns in the stock market.
But saving your spare change is just the beginning. Acorns will also give you a $20 bonus investment if you set up a monthly recurring contribution.
Once you’ve started bolstering your investment portfolio, you may also wish to consider alternative assets like real estate. This can help build long-term wealth and protect your portfolio from stock market volatility.
Homeshares allows accredited investors to gain direct exposure to hundreds of owner-occupied homes in top U.S. cities through their U.S. Home Equity Fund — without the headaches of buying, owning or managing property.
Their approach can provide an effective, hands-off way to invest in high-quality residential properties, with the added benefit of diversification across regional markets — with a minimum investment of $25,000.
With risk-adjusted target returns ranging from 14% to 17%, the Homeshares’ U.S. Home Equity Fund could unlock lucrative real estate opportunities, offering accredited investors a low-maintenance alternative to traditional property ownership.
Read more: Do you own rental properties in the US? These 6 hacks can help you boost your income and lower your tax burden
Although 97% of people aren’t yet millionaires, many could eventually meet that target if they start investing sooner rather than later.
A 20-year-old, for instance, needs to invest just $330 a month into an asset class that delivers a 7% to 8% annual return to reach $1.26 million by the time they turn 65. The luxury of time significantly boosts your chances of becoming a millionaire.
This doesn’t mean it’s too late for middle-aged savers to reach that millionaire milestone, but it will take a significantly greater investment. If a 50-year-old hasn’t started saving for retirement, they’d need to invest $3,958 a month at a steady 7% return to reach $1.26 million by retirement.
However, according to one Goldman Sachs report, investors could expect the S&P 500 to deliver just 3% annualized nominal returns over the next 10 years. After an average 13% yearly return for the past decade, a new strategy outside of the stock market may be needed for that level of outsized gain, especially if you’re late to investing.
Earning a higher return, like those that some alternative asset classes are known for, can help you reach your financial goals faster. For example, over 80% of young, wealthy American investors surveyed by Bank of America report they’re interested in, or already invested in, fine art for a portion of their portfolios.
Masterworks’ art investing platform makes it easy to join them. They handle every step, from authentication and acquisition, to storage and sale — no art expertise or billionaire’s checkbook needed.
Masterworks has already distributed over $60 million in total proceeds, including the principal, to investors across 23 exits, including the profitable return from selling a Basquiat painting for $8 million in 2024.
See if you can skip the waitlist with Masterworks here. You can find important Regulation A disclosures at Masterworks.com/cd.
Gold is another asset class that has outperformed the stock market in recent years. For instance, from 2020 to 2024, the spot price of gold has achieved better annual returns than the S&P 500. Gold is also often seen as a safe-haven investment, providing some insulation from market shifts – tariff-driven or otherwise.
Priority Gold is an industry leader in precious metals, offering physical delivery of gold and silver.
They also offer retirement accounts and the ability to convert an existing IRA into a gold IRA. Priority Gold provides 100% free rollover, as well as free shipping and free storage for up to five years. Qualifying purchases can also receive up to $10,000 in free silver.
To learn more about how Priority Gold can help you reduce inflation’s impact on your nest egg, you can download their free 2025 gold investor bundle.
Saving $1.26 million doesn’t guarantee a comfortable retirement for everyone. For example, if your net worth is $1 million but your annual living expenses are $200,000 or $300,000, you would need much more than $1 million in savings to continue living the same lifestyle in retirement.
In fact, two-thirds of millionaires don’t consider themselves “wealthy” and half of them say their financial planning needs improvement, according to another study by Northwestern Mutual.
In short, being a millionaire doesn’t mean you’re automatically ready for retirement.
If you live in a state or another country with a lower cost of living, your target might be smaller. According to Empower’s calculations on tax burdens and costs of living, states like Alaska and New Hampshire could be ideal for retirees looking to minimize their expenses.
Try using a retirement calculator or consulting a financial advisor to determine your personal target.
Advisor.com can help connect you with a local financial advisor suited to your needs. All of their advisors are pre-vetted fiduciaries, meaning that they have a legal obligation to act in your best interest.
After you match with an advisor, you can set up a free call with no obligation to hire so that you can make sure they’re a good fit for you.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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