Clark Howard

How Much Do You Need To Retire?

As a working person, perhaps you’ve grown a bit tired of the rat race and asked yourself the age-old question: How much do I need to retire?

According to Northwestern Mutual's 2024 Planning & Progress Study, which is based on answers from 4,588 U.S. adults surveyed between January 3 and January 17, 2024, Americans believe that they need $1.46 million to make it in retirement.

That figure represents a 15% increase over the $1.27 million reported in last year’s study.

Study: People Say They Need $1.5 Million To Retire

Money expert Clark Howard says such a high figure needs to be accompanied by some perspective.

“Most people who successfully retire don’t have anywhere near $1.5 million,” Clark says.

Do You Need To Be a Millionaire To Retire?

Clark says millions of people retire each year with nothing close to $1.5 million and in fact, you don’t have to be a millionaire to stop working. So how do most people do it?

“They’re able to supplement what they get from Social Security and a pension or whatever else they may have,” he says. “They’re able to supplement with some money every month by either working a little part-time job or by having a lot less money than $1.5 million and being able to retire.”

How To Approach Retirement the Clark Smart Way

Instead of thinking about how much money you won't have, Clark wants you to focus on what you will have. Here are some rules he wants you to abide by:

Rule #1: Avoid Discouragement

“Do not let somebody make you feel like it’s hopeless,” Clark says, referring to a comfortable retirement. “That $1.5 million figure was reported in all types of media. That figure may be true for someone with an upper-income lifestyle, but that’s not relevant for most people.”

Clark says most people have less than $100,000 saved for retirement, but many have even less than that.

Rule #2: Make a Habit of Saving

“Everything I do is force of habit, that’s my thing. And good habits build on themselves. If you’re not close, then today’s the day you start,” Clark says, referring to saving money.

How do you start? In our guide on how to create a budget, you can learn how to analyze your income and set some goals that will make it possible for you to start putting some money aside.

If you're saddled with bills, you'll need to get out of debt by being intentional about your spending. Once you climb out of that financial hole, it's time to save.

Rule #3: Choose a Savings Strategy for Your Money

“Start putting a set amount of money – whatever it is – into a Roth IRA for yourself, or if you’ve been ignoring a retirement plan at work, start contributing a small amount every pay period,” Clark says.

  • Open a Roth IRA, which offers tax-free growth and tax-free spending when you're eligible.
  • Take advantage of a 401(k), a tax-advantaged retirement investment account that you and your employer can both contribute to.
  • Consider an HSA (Health Savings Account), a tax-advantaged savings account that gives you an upfront tax deduction as well as tax-free growth and tax-free spending.

Clark says the key is to build a habit of saving – even if it’s a small amount at first.

“And you stay at that amount and realize, ‘Oh I can still do what I need to do,’ and then you step it up. You build that habit and don’t try to do too much,” Clark says.

Final Thoughts

So, no you don’t need $1.5 million to retire in America – although it would be nice.

“The $1.5 million is not relevant for most people,” Clark reiterates. “So, no it doesn’t have to be a number like that. It does have to be meaningful money. You may be thinking, ‘I don’t have any meaningful money,’ So how do you do it, you do it in bite-sized pieces.”

Need more money-saving advice? Read our guide for beginners on how to invest.

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