What the Average American Needs to Retire
When it comes to retirement, there’s no one-size-fits-all number — but understanding what the average American needs can help you set your own personal benchmark and adjust course if needed.
💰 So, How Much Does the Average American Need to Retire?
The answer depends on a few core factors:
Your desired lifestyle
Where you live
How long you expect to live
Whether you plan to downsize, travel, or keep working in some form
But for simplicity, here’s a rule of thumb used by many advisors:
Most Americans will need about 70–80% of their pre-retirement income annually to maintain their lifestyle.
So, if you’re earning $100,000 a year, you may need $70,000–$80,000 per year in retirement.
📊 Translating That Into a Nest Egg
According to a 2024 report from Vanguard and Fidelity:
The average American household near retirement has around $250,000–$400,000 saved.
But financial experts estimate that most people need between $1 million and $1.5 million to retire comfortably — especially considering inflation and longevity.
That gap is where intentional planning matters.
🧮 A Quick Example
Let’s say you want $75,000 a year in retirement income:
Social Security might cover ~$25,000
That leaves $50,000 per year needed from investments
Using the 4% rule (a common withdrawal strategy), you’d need around $1.25 million in your portfolio to generate that income sustainably
🚩 The Problem with Averages
Most people don’t fit the average.
Some retire earlier. Others later. Some want to golf and travel the world, others are happy gardening and visiting grandkids.
Here’s what actually matters:
Your savings rate
Your investment strategy
Your withdrawal plan
Your tax strategy (often overlooked!)
And how you manage risk as you approach retirement
✅ What You Can Do Now
Run a retirement projection — even a basic one helps. (We can help.)
Start or increase contributions — especially if you're over 50 and eligible for catch-up contributions.
Make sure your portfolio is aligned — not just diversified, but purposeful.
Have a tax and withdrawal strategy — because what you keep matters as much as what you earn.
👥 The Bottom Line
The average American might need $1 million or more to retire — but your number depends on your life. Don’t wait to figure it out when you're five years away from needing it.
At William Allan, we specialize in long-term, tax-smart planning that helps individuals build retirement income with confidence — no guesswork, no hype.
Nothing contained herein this letter should be considered investment advice, research or an invitation to buy or sell any securities
