What is your magic retirement number?

By Chris Taylor

NEW YORK (Reuters) – How much money do you really need for retirement?

One guess is $1.27 million, a new survey from Milwaukee-based Northwestern Mutual shows. But there is no ‘Magic Number’ for everyone.

After all, retirement may be decades away, subject to variables such as life events, inflation, stock market returns, and savings rates.

That is why such estimates are all over the map. One Charles Schwab survey put the figure at $1.7 million, and LendingTree estimated $1.07 million.

Even within Northwestern Mutual’s annual Planning & Progress study, there are wild discrepancies: Those in their 50s said they would need $1.56 million, while those in their 60s estimated $968,000, and 20-somethings said $1.2 million.

Inflation is nudging overall estimates higher and higher. High net worth individuals, for example, estimate needing $3 million for retirement.

“Everything is costing a bit more,” noted Chris Collins, a wealth management adviser who handles private clients for Northwestern Mutual.

How can you come up with your own ‘Magic Number’? Here are a few pointers from financial experts.


Having a savings target can help, for motivation if nothing else. But just as with real estate, national averages do not mean much.

What matters are personal factors like your local cost of living, retirement lifestyle, and if you still owe anything on your house.

In other words, “there is no magic number,” said financial planner Ashley Folkes of Hoover, Alabama.

To arrive at something which makes sense for you, try advanced retirement calculators such as those by SmartAsset or Bankrate which take multiple factors into account.


Retirement planners often cite the “4% rule”: To make your money last, do not take out more than 4% from your total balance every year. Some number crunchers say 5% annual withdrawals should be fine, and some say 3% to be safe.

But if 4% is a good general target, work backwards from that, said Bradley Lineberger, a financial planner with Seaside Wealth Management in Carlsbad, California. “A portfolio of $1 million could safely distribute $40,000 per year of income, and continue to grow over time so it won’t run out.”

That, plus Social Security income, would put you on solid ground. If you want real retirement comfort, aim even higher: One recent Bloomberg investor survey put the dream figure at an eye-popping $3 million to $5 million.

All survey estimates have one thing in common: They are all in the seven figures.


The target figure may be quite different from the reality. While we would all like to reach the $1.27 million goal in the Northwestern Mutual study, the Federal Reserve’s most recent Survey of Consumer Finances in 2019 shows retirement savings average around just $65,000.

Your target may also change with life circumstances, earnings, spending and other factors.

Many steps can bring you closer to your ‘Magic Number.’ You can invest to boost annual returns, sell your house and downsize to cut costs, delay Social Security to get bigger payouts later, work a few more years, or move to a lower-cost area with no state taxes.

“Your target will likely shift as your life changes,” said Adam Hubert, a financial planner with RW Baird in Canonsburg, Pennyslvania. “It’s a simple question – but with a complicated answer.”

(Reporting by Lauren Young; Editing by Richard Chang)