How much do you really need to be comfortable in retirement? And what do you do if you aren’t even close? Let’s look at a specific situation and break down the numbers.
A 59-year-old career nurse and her husband have been working hard for decades. Together, they’ve managed to save around $250,000 in retirement accounts. On top of that, they’re expecting a $1,100 monthly pension along with $1,800 to $2,300 in combined Social Security benefits when the time comes. They also estimate they’ll have around $200,000 to $300,000 in home equity when they retire.
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For years, the couple felt relatively confident in their retirement plan — until a coworker in a similar salary range mentioned that he’d saved $700,000 in his 401(k). Now, the couple is worried that they’re behind — and exhausted by the thought of having to work for another eight years to catch up.
How much do you really need for retirement?
The average American between the ages of 55 and 64 has saved $537,560 toward retirement, according to the Federal Reserve. But that figure is heavily skewed by high earners. The median savings for that age group is just $185,000, which means this couple, with $250,000 saved, is actually ahead of most Americans their age.
Still, being ahead of the curve isn’t necessarily enough. Your actual expenses, income, lifestyle and health all matter more. And it’s easy to feel behind when comparing yourself to someone who has managed to sock away a lot more.
The couple is also nowhere near the figure the wider population believes is necessary to retire comfortably. According to Northwestern Mutual, Americans think the magic number to retire is $1.26 million [1].
It appears the couple is behind on savings. However, there are some details worth considering. First, they are expecting a pension payment of $1,100 per month. Over just 10 years, that’s the equivalent of having another $132,000 in retirement — and if they live longer, that payment just keeps coming, so it could be worth a whole lot more.
Additionally, they have an estimated $1,800 to $2,300 in Social Security benefits, which is likely dependent on when they start withdrawing benefits.
You can start withdrawing Social Security at 62, although the longer you delay withdrawing it, the higher your monthly payments will be, at least until you reach 70. While it’s generally not recommended that younger people count on Social Security as much, there are unlikely to be significant changes for this couple.
Let’s say they both retire at 65, so in six years. They’ll receive around $3,000 from Social Security and their pension. If they withdraw $2,000 per month from their retirement savings, for a total monthly income of $5,000, their retirement savings will last approximately 17 years, assuming a 22% income tax bracket and 8% annual growth.
But that assumes they work full-time for six more years. If between them they contribute the maximum to one 401(k) over that time frame, which is $31,000 per year and potentially $34,750 per year between the ages of 60 and 63, they’ll be able to stash away an extra $197,250 for a total of $447,250, which will last them over 30 years at a $2,000 monthly withdrawal rate. And that’s not including employer contributions.
This couple should work a few more years if they’re able. However, whether they are behind on retirement savings depends heavily on their expenses and, to a certain extent, any additional income they could raise. For example, if they sell their home and withdraw the $300,000 in equity, that would put them in a great spot. Nevertheless, they will still need to account for housing costs.
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How much do you need to save for retirement?
Retirement savings are personal. The amount you need can vary based on your spending habits, your desired retirement lifestyle and even your medical history. So, the first step is to estimate these costs. Consider how much you will need each month for essentials and entertainment, factoring in that you will have lots of free time, and remember that older people generally spend much more on health care.
The quickest way to calculate your retirement number is to take 80% to 90% of your current expenses and then multiply them by 25. Or, take whatever number you think you’ll want to spend annually and multiply it by 25. So, if you want $100,000 to spend each year in retirement, you’ll need around $2.5 million. Keep in mind that this is back-of-the-napkin math; you’ll also need to consider more personal factors, such as health care costs and housing.
What do you do if you’re behind?
Maximize retirement contributions while you can
Individuals aged 50 and over can make catch-up contributions to retirement accounts. In 2025, the total amount people in this age group can contribute is up to $31,000 per year in a 401(k) and $8,000 per year in an individual retirement account (IRA). Some 401(k) plans also allow individuals aged between 60 and 63 to contribute an extra $3,750 per year, bringing maximum 401(k) contributions in those three years up to $34,750.
You don’t necessarily have to max out those allowances. Even adding $500 to $1,000 per month now could make a noticeable difference in the next five to seven years.
Consider phased or part-time retirement
If full-time work feels unsustainable, consider exploring options for scaling back hours or transitioning into a less demanding (but still income-generating) role. Working part time from 62 to 67 can delay Social Security benefits, allowing investments to grow.
Reassess expenses and downsize if needed
A smaller home, fewer cars or selling unused assets, such as land or recreational vehicles, can help unlock cash flow and boost your retirement savings. Every dollar not spent is a dollar that can be invested for retirement.
Is this couple doomed to work until they die? Not at all. But, they may need to adjust expectations and get strategic. Retirement isn’t about hitting a magic number; it’s about finding the right balance that works for your lifestyle and financial goals.
What to read next
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[1]. Northwestern Mutual. “Planning & progress study 2025”
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