Recent surveys seem to suggest that many Americans believe they need to reach the seven-figure mark to have a shot at a comfortable retirement.
Investors surveyed by Schroders (1) said they needed an average of $1.28 million in savings to afford a good retirement, which is very close to the $1.26 million “magic number” the average respondent to the Northwestern Mutual 2025 Planning & Progress Study (2) claimed to be targeting.
Simply put, most people consider being “barely a millionaire” sufficient to be retirement-ready. But in reality, is that figure really enough? The answer may depend on two factors that go beyond the size of your nest egg: sources of income and local cost of living.
While planning retirement, many savers and financial advisors default to the standard 4% rule. Developed by William Bengen (3), the rule suggests a nest egg is large enough to enable retirement if a 4% annual withdrawal rate can cover your living expenses.
With that in mind, a $1.28 million nest egg would be adequate if you can live on $51,200 per year.
However, this simple back-of-the-envelope calculation assumes that your nest egg is your only source of income, which usually isn’t the case. Tens of millions of retirees have at least one other income source: Social Security.
As of early 2026, the average monthly benefit payout from this program is about $2,071. If your annual living expenses are $50,000, the average Social Security payment could cover roughly half of that, which means your nest egg target can be significantly lower than $1.2 million.
If you have even more sources of income, such as a corporate defined benefit pension or rental real estate, that lowers your target further.
On the other hand, if your annual budget is significantly higher and payouts from Social Security or other sources are limited, your target may be higher than $1.28 million.
Simply put, how much you spend in retirement is the key variable — and where you live can have a massive impact on that.
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Your personal spending and budgeting habits can only go so far, especially if you live in a state or city with a high cost of living.
In San Jose, for instance, a typical retiree would need about $60,811 per year beyond Social Security benefits to live comfortably, according to LendingTree’s analysis. Applying the 4% rule to that figure yields a personal nest egg target of roughly $1.5 million.
By comparison, states like Oklahoma, Mississippi, and West Virginia are often cited among the cheapest places to live or retire in, according to Ramsey Solutions (4). If you live abroad or with family, your costs could be even lower.
In short: your location plays a key role in how much you need to save to retire comfortably. A nest egg of $1 million could be more than sufficient in some places and insufficient in others.
The bottom line is that your retirement plan must be as personalized as possible. A general $1 million target may be too high or too low, depending on your circumstances.
With that in mind, consider your present and future circumstances to find your own “magic number.” Start by assessing your benefit payments by logging into your “my Social Security” account. Use the administration’s online calculators to see how much your benefit changes depending on the age you are when you file your claim.
With benefits as a baseline, consider all your living expenses and adjust them for estimated inflation to get a realistic sense of how much money you will spend each year in retirement.
You can use the 4% rule as a starting point, but don’t rely on it as a fixed number. In fact, even Bengen, the creator of the rule, has suggested that a slightly higher initial withdrawal rate (around 4.5% to 4.7%) may be reasonable in some cases, with adjustments over time based on inflation and market performance.
To get even more granular, consider working with a tax professional or financial planner.
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Schroders (1); Northwestern Mutual (2); CNBC (3); Ramsey Solutions (4)
This article originally appeared on Moneywise.com under the title: Is $1 million still enough for retirement? That depends entirely on you — here’s how to figure it out
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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