In step with the decline in inflation from 5% to 3% in the past two years, Americans think they will need to save less, $1.26 million, to be able to retire comfortably, a Northwestern Mutual study found. That figure is down $200,000 from the $1.46 million reported last year — and on par with people’s estimates in 2022 and 2023.

As for how much people have saved, among all age groups, 25% have one year or less of their current annual income set aside. More than half, 52%, of Gen Xers, those 45 to 60, have just three times their annual salary or less saved.

It is no surprise, then, that 54% of Gen Xers think they will not be financially prepared for retirement when the time comes. They are the only demographic group saying they don’t think they will be ready to retire.

Fifty-one percent of Americans think it is somewhat or very likely they will outlive their savings, but 35% of Americans have not taken any steps to address this potential difficulty.

Northwestern Mutual recommends retirement savers have enough money set aside to replace 80% of their income. However, the asset management firm recognizes that each person’s financial situation is very different and depends on a multitude of factors, including the lifestyle they want to live in retirement, when they want to retire, where they live, and, of course, their health.

Northwestern Mutual emphasizes the importance of starting to save early and regularly for retirement, noting that a person starting at age 20 would only need to put aside $330 a month in a hypothetical portfolio delivering an average 7% annual return to get to the $1.26 million target by age 65.

An individual who didn’t start saving for retirement until age 30 would need to set aside $695 a month. People starting at age 40 would need to sock away $1,547, and a 50-year-old would have to save $3,958 each month.

Retirement savers, especially younger ones, expect they will continue to work in some fashion in retirement, and also be active.

Among all generations, 51% envision traveling more, 46% plan to engage in activities that are more personally fulfilling, 45% foresee spending more time with friends and family, 37% expect to do more work, and 21% plan to volunteer more.

“Younger Americans have ambitious financial goals, and they’re taking action to reach them,” said John Roberts, chief field officer at Northwestern Mutual. “If this generation determines how much they need to save, continues to generate wealth, and protects what they’ve already built, they could be in a strong position to achieve financial security.

“For many Americans, the definition of retirement seems to be changing from ‘retiring from work’ to “finding a role that’s more meaningful to me,” Roberts continued. “Instead of golf, cruise boats and cocktails, large percentages see themselves employed at an organization or a cause that they believe in.”

The Harris Poll conducted Northwestern Mutual’s 2025 Planning & Progress Study among 4,626 U.S. adults online between January 2 and January 19, 2025.