Many Americans are falling short of their retirement savings goals, according to new research on financial planning. The study shows that people believe they will need more than $1 million to retire comfortably, yet the actual savings of most adults in the United States remain far from that mark.
The findings highlight a growing concern as the cost of living and expectations for retirement rise faster than the savings rate. While people continue to set higher targets for their future, the reality is that their current nest eggs don’t come close to matching those goals.
How far are Americans from their retirement savings goals?
Northwestern Mutual’s annual financial planning study revealed a striking gap between expectations and reality. On average, US adults now say they will need $1.26 million to retire comfortably by age 65. This target has increased sharply in recent years, up from an estimated $951,000 in 2020.
But despite setting the bar higher, actual savings tell a different story. Among Americans with retirement accounts, one in four admits to having just a single year or less of their current annual income saved for retirement. Over half (52%) report having no more than three years’ worth of income put aside.
The disconnect has left many people doubtful about their future security. More than half of those surveyed—54%—believe they will not be financially prepared when retirement arrives. The data paints a clear picture: while Americans recognize the growing cost of retirement, most have been unable to keep pace with the savings needed to meet those expectations.
The study’s findings suggest that retirement planning is not just about setting ambitious goals, but also about building realistic strategies to meet them. With the estimated need for retirement climbing by hundreds of thousands of dollars in just a few years, the pressure to save more has never been greater. Yet, the gap persists, showing that even as awareness increases, actual financial behavior has not caught up.
Why the savings gap keeps widening
One factor driving this divide is the rising expectation of how much money will be necessary to retire comfortably. As people factor in longer life spans, higher medical costs, and lifestyle goals, the amount they think they will need continues to grow. However, salaries and personal savings often fail to match that growth, creating a shortfall that is hard to close.
The numbers also reveal that many people are still heavily dependent on their current income, with limited financial backup if circumstances change. Having just a year or two of income saved leaves little margin for unexpected events, let alone decades of retirement. This reality makes long-term financial security seem out of reach for a large share of working adults.
Another reason the gap persists is that saving for retirement competes with more immediate financial priorities. Expenses such as housing, debt, education, and everyday living costs typically take precedence, making it difficult for many households to set aside significant amounts for the future. The study underscores how these competing demands can derail even the best intentions to save more.
What stands out in the survey is not only the scale of the savings gap, but also the perception among Americans themselves. With more than half already believing they won’t be financially ready for retirement, there is widespread acknowledgment that expectations and savings are not aligned. This sentiment reflects a broader concern about the economic pressures facing individuals as they plan for life after work.
