Is the Average Retirement Savings Enough? Probably the Wrong Question.

Is the average retirement savings enough? Honestly, the average tells you almost nothing about whether you personally have enough. The headline "$1.26 million" figure is a survey of what people believe they'll need, not a calculation of what anyone actually needs. And "average" account balances get pulled up by a handful of very large savers, so they overstate where the typical person really sits. Whether your savings are enough comes down to your spending, your Social Security, and the gap between them, not a number in a headline.

I made the video below because I keep watching careful savers compare themselves to the wrong yardstick and either panic or coast. Both mistakes are expensive. Let me walk through what the popular numbers actually mean, then show you how to build the number that's yours.

▶ Video: youtube.com/watch?v=x5wOOR9FQcw, “Why the $1.26 Million Retirement Target Could Cost You 5 Years”

Watch: Patrick Shope on why chasing the average retirement number can cost you years.

The myth: "If I hit the magic number, I'm set"

The belief is understandable. You see it everywhere: Americans think they need about $1.26 million to retire comfortably. That's a real figure, from the Northwestern Mutual 2025 Planning & Progress Study, and it's worth taking seriously as a snapshot of the national mood. It was even higher the year before, around $1.46 million.

Here's the reality. That number is a survey of beliefs, not a plan. It's the answer thousands of people gave when asked what they guessed they'd need. Nobody ran their spending, their pension, or their Social Security. So treating $1.26 million as your target is like deciding how much house you can afford by asking strangers what they think a nice house costs. It has nothing to do with your mortgage, your income, or your town.

I'll say the thing most people won't: chasing a headline number is one of the most common ways good savers talk themselves into working years they didn't need to work. That's not a small mistake. That's your time.

The myth: "The average balance tells me where I stand"

People see an average and assume it describes the typical person. It usually doesn't. Averages get dragged upward by a small group at the top, and retirement balances are a textbook case.

Think about home prices in a neighborhood. Say nine homes sell for about $300,000 each and one mansion sells for $3 million. The average sale price comes out around $570,000, but the median, the one in the middle, is $300,000. Which number better describes a normal house on that street? The median, every time. The average is telling you about the mansion.

Retirement accounts work the same way. Among savers in their 60s, the average balance is roughly $573,000, while the median is about $211,000. That's a huge gap, and the gap is the whole story: a relatively small number of large accounts pull the average far above where the typical saver actually is. If you're measuring yourself against the average, you may be comparing yourself to the mansion. I dug into this in more detail in what the average 401(k) balance at 60 really tells you, because the number gets misread constantly.

The myth: "There's one number everyone needs"

The generic rule says you need a million dollars, or you need the headline figure, full stop. But a couple spending $50,000 a year and a couple spending $100,000 a year don't have remotely the same target, no matter what any average says. Your number is built from your life, not borrowed from a chart.

The build is simpler than it sounds. Start with what you actually spend. Estimate what you'll spend in retirement, which is often around 80% of today's spending once the commute, the mortgage, and the payroll taxes fade. Subtract the income that shows up no matter what, mainly Social Security. What's left is your income gap, and that gap is the only thing your savings have to cover. I laid out the full sequence in how to calculate how much you need to retire, and the bigger-picture version in how much money you actually need to retire.

The reality in numbers: a couple who thought they were behind

Let me show you the math with a composite. A couple we'll call Stan and Janet, both 59, spend about $75,000 a year. They'd saved $850,000, and they were quietly miserable about it, because every article told them the number was $1.26 million. On paper they felt roughly $400,000 short.

So we ran their real numbers instead. They expect to need about 80% of their current spending, which is around $60,000 a year. Their combined Social Security at full retirement age comes to roughly $42,000 a year. (That's their estimate, and yours will differ.) That leaves an income gap of about $18,000 a year that their savings have to produce.

Now apply the 4% rule, the guideline from William Bengen's 1994 research, which found that a 4% first-year withdrawal, adjusted for inflation, held up across every historical 30-year window he tested (Source: William Bengen, "Determining Withdrawal Rates Using Historical Data," Journal of Financial Planning, 1994). To generate $18,000 a year at a 4% withdrawal, you divide $18,000 by 0.04. That's $450,000.

Read that again. They needed about $450,000. They had $850,000. Stan and Janet weren't behind. They were nearly $400,000 ahead of their own target, and they'd been considering five more years of work to chase a headline that had nothing to do with them.

The reality: your comfort with withdrawals can move the target

Here's a wrinkle the averages never mention. The 4% rule isn't a law of nature. It assumed a fixed, roughly balanced portfolio, a 30-year horizon, no fees, and no flexibility to adjust spending in a bad year. Change those assumptions and your number changes.

Suppose Stan and Janet are comfortable with a slightly higher 4.5% withdrawal. Divide $18,000 by 0.045 and their target drops to $400,000. With $850,000 saved, that's an even larger cushion for market drops and surprise expenses. The point isn't that a higher rate is automatically safe. The point is that your own numbers give you real levers to pull. A headline gives you none.

So, is the average retirement savings enough? Ask a better question

Stop asking whether the average is enough. It can't answer a personal question. Ask instead: what's my spending, what income arrives no matter what, and how big is the gap in between? That's the number that decides your timeline.

In our office, the couples who sleep best at night aren't the ones with the biggest balances. They're the ones who can tell me their own number without flinching. If you're in your 50s or early 60s, the window to make meaningful adjustments is still open, whether that means saving more, retiring sooner, or just gaining the peace of mind of knowing where you stand. When you're ready to trade the headline figure for the one that actually applies to your life, start a conversation with us and we'll build it together.

The saddest thing I see isn't people who saved too little. It's people who had plenty and spent five extra years working to catch a number that was never theirs to begin with. Your retirement isn't average. It's yours. Measure it that way.

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