For many Americans, retirement isn’t just about getting by — it’s about living comfortably and maintaining a middle-class lifestyle.
Earning $12,000 a month ($144,000 a year) in passive income, for instance, could make that possible, covering everyday expenses while still allowing for travel, dining out, and other luxuries.
But reaching that level of income in retirement requires more than just a large nest egg. Your savings must also be resilient enough to handle inflation, market swings, and the risk of outliving your money.
The financial bar for this kind of retirement is likely higher than most people expect. Here’s why.
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Extraordinary retirement
Retiring on $144,000 isn’t typical. In 2025, the “magic number” for retirement savings is $1.26 million, according to a Northwestern Mutual study. Using the standard 4% rule, that equates to about $50,400 per year — or $4,200 per month in retirement income.
That figure aligns closely with the median retirement income of $54,710 for Americans over 65, based on 2023 U.S. Census Bureau data.
By contrast, aiming for $12,000 per month in retirement income means targeting nearly three times the income of the average retiree. To support that level of spending using the 4% rule, you’d need around $3.6 million in retirement savings.
That’s already a steep target, but it only scratches the surface. Once you factor in inflation and longevity risk, the bar climbs even higher.
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Inflation and longevity risk
Even modest inflation can erode purchasing power over time. For example, if you retire at 62 and live to 82, a 2% annual inflation rate would significantly reduce what your retirement income can buy.
To maintain the same standard of living as $144,000 in your first year of retirement, you’d need about $214,000 per year by age 82.
Your ability to manage this issue depends heavily on your investment strategy. If you rely primarily on low-risk assets like bonds or Treasury securities, you may need well over $3.6 million to keep up with inflation.
Alternatively, you might invest in inflation-sensitive assets like stocks, real estate, or gold. Many retirees do. According to Empower, the average American in their 60s or 70s holds nearly half their portfolio in equities..
While these assets offer higher long-term growth potential, they’re also more volatile which makes consistent withdrawals more difficult.
This is why Bill Bengen, the creator of the 4% rule, called inflation the “greatest enemy of retirees.” In a CNBC interview, he recommended adjusting your withdrawal rate annually to account for inflation, rather than sticking to a fixed percentage. This mirrors how Social Security benefits are adjusted to maintain purchasing power.
Ultimately, your ability to generate $12,000 a month in retirement depends on several factors:
- The size of your portfolio
- Your expected inflation rate
- Your withdrawal strategy
- Your investment mix
That said, $3.6 million is likely a starting point if you aim to sustain a high standard of living for more than 20 years in retirement.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.