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Most Americans believe the “magic number” for retirement is $1.26 million, according to a survey by Northwestern Mutual (1).
But it’s easy to forget that retirement isn’t really about hitting a specific dollar target — it’s about replacing your income so you can sustain your lifestyle without working.
“Tempting as it is to put a single number on retirement, the answer to how much you’ll need to save really depends on the life you expect to lead,” says Ben Storey, director of Retirement Research & Insights of Bank of America (2).
This was further highlighted in JPMorgan Asset Management’s 2025 Guide to Retirement (3). The banking giant’s guide shows that many people can retire comfortably if they shift their attention away from becoming millionaires to simply replacing their current income.
Here’s a closer look at the underlying calculations.
If your primary objective is to replace your current income, then you’ll require a more modest amount for retirement if you’re lower or middle income.
JPMorgan’s report shows that households with relatively low income can rely more on Social Security benefits and employer-backed private retirement schemes to replace their current earnings, relative to higher earners.
A family earning $300,000, for instance, might only have 55% of their income replaced by these sources.
Therefore, according to JPMorgan’s calculations, for households with an annual income of $125,000 and above, a seven-figure savings target could be justified.
Their income replacement calculations suggest that for households with income below $90,000, you can maintain an equivalent lifestyle in retirement with a 5% annual gross savings rate, or $4,500 per year. The average personal savings rate for Americans was 4.7% in September, according to the Bureau of Economic Analysis (4).
Meanwhile, for households making $100,000 or more, JPMorgan’s analysis uses a 10% annual gross savings rate instead.
While those may seem like lofty numbers, there are ways to grow your savings in the background — seamlessly building wealth for retirement, without even thinking about it.
With Acorns, every purchase on your credit or debit card is automatically rounded up to the nearest dollar, with the excess placed into a smart investment portfolio.
Let’s say you purchase a doughnut for $2.30. Before you’re done licking the sugar off your fingers, Acorns will round the amount to $3.00 and invest the 70-cent difference for you.
Look at this math: $2.50 worth of daily round-ups adds up to $900 per year — and that’s before your savings earn money in the market. If you’re a little short of your savings rate goal, this could easily take you over the line.
Plus, if you sign up now with a recurring monthly deposit of at least $5, you can get a $20 bonus investment. This can give you an extra boost if the round-ups aren’t quite enough to meet your goals.
While an arbitrary savings target like that $1 million milestone might simplify your retirement plan in theory, it’s not necessarily realistic.
According to Investopedia’s analysis of Federal Reserve data, only 2.6% of all Americans, and just 3.2% of retirees, have $1 million saved (6). That means a seven-figure target is unrealistic for most.
Based on their income-replacement model, JPMorgan estimates that the typical American household needs far less than $1 million to retire comfortably. A household earning $90,000, for example, with an annual gross savings rate of 5% should reach $700,000 in savings by the age of 65 to “maintain an equivalent lifestyle in retirement.”
If the household earns $30,000 or $50,000, the target is $175,000 and $350,000, respectively.
The numbers will vary greatly, which is one of many reasons it might be worth speaking with a qualified professional about your retirement goals.
Advisor.com can help connect you with a financial advisor suited to your needs and based in your area. All of their advisors are pre-vetted fiduciaries, meaning that they have a legal obligation to act in your best interest.
After inputting your ZIP code to get matched with a nearby financial professional, you can set up a free call with no obligation to hire to make sure they’re a good fit for you.
Read more: Warren Buffett used 8 solid, repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)
Once you know your benchmark, it’s crucial that you check in on your progress to make sure you’re on track for retirement.
You could use Monarch Money’s all-in-one budgeting app to get all of your finances under one roof, from your banking statements to your investments.
You can also add separate or joint accounts to your dashboard, which can be great for tracking your household retirement savings rather than having to manually combine information from all of your accounts.
The app is also well reviewed. Forbes and the Wall Street Journal ranked Monarch Money as their best budgeting app for 2025.
The best part? Monarch Money offers a seven-day free trial so you can see if it’s right for you. If you like what you see, you could then snag 50% off your first year with code WISE50 to get a bird’s eye view on your path to retirement.
Beyond building your nest egg through cash, savings and investing strategies, it may be worth considering alternative assets such as real estate.
Investing in real estate can add diversification to your portfolio and can provide regular income distributions as well.
But if you aren’t ready to jump into home ownership (financially or otherwise), there are platforms like Arrived that let you buy stakes in rental properties, earn dividends and skip the responsibilities of property management.
Backed by world-class investors like Jeff Bezos, Arrived’s easy-to-use platform offers SEC-qualified investments such as rental homes and vacation rentals for as little as $100.
Their flexible investment options allow both accredited and non-accredited investors to benefit from this inflation-hedging asset class with ease. You can start by browsing vetted properties, then it’s as simple as selecting a property and choosing the number of shares to buy.
mogul is a real estate investment platform offering fractional ownership in blue-chip rental properties, which gives investors monthly rental income, real-time appreciation and tax benefits — without the need for a hefty down payment or 3 A.M. tenant calls.
Founded by former Goldman Sachs real estate investors, the team hand-picks the top 1% of single-family rental homes nationwide for you. Simply put, you can invest in institutional quality offerings for a fraction of the usual cost.
Each property undergoes a vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Their cash-on-cash yields, meanwhile, average between 10 to 12% annually. Offerings often sell out in under three hours, with investments typically ranging between $15,000 and $40,000 per property.
Every investment is secured by real assets, not dependent on the platform’s viability. Each property is held in a standalone Propco LLC, so investors own the property — not the platform. Blockchain-based fractionalization adds a layer of safety, ensuring a permanent, verifiable record of each stake.
Getting started is a quick and easy process. You can sign up for an account and then browse available properties. Once you verify your information with their team, you can invest like a mogul in just a few clicks.
Bear in mind that JPMorgan’s calculations hinge on supplemental income from Social Security — but the program’s funding is in jeopardy.
Beneficiaries could face a 24% cut by 2032, according to the Committee for a Responsible Federal Budget (CRFB), and a 30% or greater cut by 2099 (7).
The bank acknowledges that this can be avoided if Congress acts to bolster the program’s trust funds before they run dry, but if you are relatively young and not optimistic about lawmakers solving this problem, you may want a higher savings target to safeguard your retirement.
And more imminent cuts may be on the horizon for a select group of Americans. The Trump Administration is preparing a rule change that could reduce or eliminate Social Security income for hundreds of thousands of low-income adults and people with disabilities, according to Newsweek. If beneficiaries receive “in-kind support and maintenance” — meaning housing or food from relatives — their benefits may soon be reduced by a third (8).
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Northwestern Mutual (1); Bank of America (2); JPMorgan (3); Bureau of Economic Analysis (4); Investopedia (5); Committee for a Responsible Federal Budget (6); Newsweek (7)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.