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For all the talk about the U.S. retirement crisis, and it’s valid to be sure, it’s not all bad news on the retirement front. In fact, some green shoots are emerging.
Northwestern Mutual's 2025 Planning & Progress Study indicates Americans’ retirement “magic number” – the dollar amount they believe they need to say to enjoy a solid quality of life when they’re done working – declined. The newest iteration of the study says the target number is $1.26 million. That’s still a significant figure, but the good news is it’s $200,000 below the levels seen in the 2022 and 2023 versions of the poll.
Inflation was one of the primary culprits in juicing the dollar amount many were seeking for retirement and with inflation easing somewhat, it’s taking some pressure off post-work financial needs.
“One explanation for the new number could be inflation – while still people's #1 concern – isn't as elevated as it was in recent years,” says John Roberts, chief field officer at Northwestern Mutual. “Inflation is often described as 'sticky' because it can take a long time for people's attitudes about it to change. The inflation rate retreated from 6% in 2023 to about 3% in 2024, and now in 2025, Americans are adjusting their perceptions about their future financial needs.”
Advisors Still Needed
There’s no getting around the facts that $1.26 million is a lot of money and that accumulating that amount requires diligence and planning. So although the retirement magic has retreated, advisors remain integral in the equation and the following data proves why that’s the case.
“The amount Americans need to invest each month to accumulate $1.26 million by age 65 depends on several factors – especially when they start saving. Individuals starting at age 20 would need to invest $330 per month, others starting at age 30 would need to set aside $695 per month – assuming a 7% rate of return compounded daily,” according to Northwestern Mutual. “The longer they wait – the more they need to invest. People starting at age 40 would need to save $1,547 per month – and if they postpone saving to age 50, they would need to invest $3,958 per month. This equation assumes that individuals save regularly and never borrow from their retirement savings accounts before reaching age 65.”
There’s another magic number that highlights the importance of advisors: the percentage of pre-retirement income clients and workers are wanting to replace when they leave the workforce. That varies from client-to-client, but on an aggregate basis, the percentage is large and it implies that the need for advisors is as strong as ever.
“In general, Northwestern Mutual recommends that people aim to replace around 80% of their pre-retirement income. However, the actual 'magic number' calculation for each person will depend on things like when they want to retire, where they'll live, and what kind of lifestyle they want to maintain throughout their retirement years,” adds the asset manager.
Impart the Value of Starting Now
For the most part, 65 remains the standard retirement age and that implies a working life of about four decades and while that’s a long time, some workers delay saving for retirement while others have more ambitious targets. As Northwestern Mutual points out, even those that expect to retire at 65 don’t start actively saving for retirement until they’re an average of 31 years old.
Further accentuating the need for not delaying retirement savings and establishing solid plans today are generational views on retirement. In what should be a call to retirement planning activism for this demographic, Gen X believes they won’t have enough to retire – alarming considering they’re next up on the retirement docket after their boomer parents. Fortunately, young people are taking retirement planning seriously and advisors should note that as well.
“For instance, Gen Z'ers started saving at 24, aim to retire at 61, and more than a third (34%) think it's likely they'll live to 100. Boomers+ started saving at 37, aim to retire at 72, and less than a quarter (23%) think it's likely they'll live to 100,” concludes Northwestern Mutual.
Related: The Untapped Opportunity: Are Advisors Missing Out on Single Investors?