Apr 3, 2026
With the rapidly rising cost of living and market volatility, it’s easy to feel uncertain about retirement. In fact, nearly six in 10 U.S. adults surveyed by Goldman Sachs reported that they worry they may outlive their retirement savings (1).
Stressed about the future, many believe the only way to retire comfortably is to become a multimillionaire. According to North Western Mutual, the average retirement savings target is $1.26 million, meaning many Americans feel they need to save more than a million dollars before retiring (2).
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The reality is that becoming a multimillionaire is not realistic for everyone. However, you likely don’t need $1.2 million or more to retire comfortably.
Here are some key facts many anxious Americans might overlook.
Most retirees stay within budget
Retirees often manage their budgets better than expected. According to the Employee Benefit Research Institute (EBRI), 55% of retirees report that their retirement expenses are either equal to or lower than what they anticipated (3). In other words, more than half of seniors are actually managing their money well.
Withdrawal data also reflects conservative spending. A 2025 study in Financial Planning Review found that married couples aged 65 and older with at least $100,000 in retirement savings withdraw about 2.1% per year, while single retirees withdraw about 1.9% annually. These figures are well below traditional planning assumptions (4).
Simply put, your monthly expenses may not be as high as you think. Since retirees no longer face costs like commuting, work attire or regular business-related expenses, overall spending often declines.
Lower monthly expenses also mean you need a smaller nest egg to generate income. Using the 4% rule as a guideline, every $1,000 in annual expenses requires roughly $25,000 in savings. If your projected expenses are $10,000 lower than expected, your retirement target could decrease by up to $250,000.
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Fixed income is a key source of security
While expenses are at or below expectations for many retirees, fixed income sources — particularly Social Security — also provide steady monthly cash flow that reduces reliance on large personal savings.
As of January 2026, the average Social Security benefit is about $2,071 per month, according to the Social Security Administration (SSA) (5). For a retired couple receiving two average benefits, that equals approximately $49,700 per year in combined annual income.
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This income lowers the amount needed for personal savings. Using the 4% rule as a planning benchmark, generating $49,700 in annual income from investments alone would require about $1.24 million in retirement assets.
Because Social Security provides part of that income, retirees do not need to generate the full amount from personal savings. When that income is covered by Social Security, it reduces the amount you must personally save — but the impact depends on your total expenses and benefit levels, rather than automatically cutting your savings target roughly in half.
The 4% rule is conservative — and evolving
The 4% rule remains a widely used benchmark in financial planning, but it has limitations. It was developed in the 1990s and is designed to withstand poor market conditions.
In fact, William Bengen, the creator of the rule, has since revised his estimated “safe maximum” withdrawal rate to about 4.7% (6).
A higher withdrawal rate reduces the amount of savings required to generate a given income. For example, if you need $50,000 per year in income (excluding Social Security), your target would be about $1.25 million under a 4% withdrawal assumption, but roughly $1.06 million under a 4.7% assumption.
Bottom line: most retirees likely do not need $1.2 million to retire comfortably under typical market conditions — especially when combining diversified investments with fixed income sources like Social Security.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Goldman Sachs (1); Northwestern Mutual (2); Employee Benefit Research Institute (EBRI) (3); Wiley Online Library (4); Social Security Administration (SSA) (5); CNBC (6)
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
