Recent surveys seem to suggest that many Americans believe they need to reach the seven-figure mark to have a shot at a comfortable retirement.
Investors surveyed by Schroders (1) said they needed an average of $1.28 million in savings to afford a good retirement, which is very close to the $1.26 million “magic number” the average respondent to the Northwestern Mutual 2025 Planning & Progress Study (2) claimed to be targeting.
Simply put, most people consider being “barely a millionaire” sufficient to be retirement-ready. But in reality, is that figure really enough? The answer may depend on two factors that go beyond the size of your nest egg: sources of income and local cost of living.
While planning retirement, many savers and financial advisors default to the standard 4% rule. Developed by William Bengen (3), the rule suggests a nest egg is large enough to enable retirement if a 4% annual withdrawal rate can cover your living expenses.
With that in mind, a $1.28 million nest egg would be adequate if you can live on $51,200 per year.
However, this simple back-of-the-envelope calculation assumes that your nest egg is your only source of income, which usually isn’t the case. Tens of millions of retirees have at least one other income source: Social Security.
As of early 2026, the average monthly benefit payout from this program is about $2,071. If your annual living expenses are $50,000, the average Social Security payment could cover roughly half of that, which means your nest egg target can be significantly lower than $1.2 million.
If you have even more sources of income, such as a corporate defined benefit pension or rental real estate, that lowers your target further.
On the other hand, if your annual budget is significantly higher and payouts from Social Security or other sources are limited, your target may be higher than $1.28 million.
Simply put, how much you spend in retirement is the key variable — and where you live can have a massive impact on that.
Your personal spending and budgeting habits can only go so far, especially if you live in a state or city with a high cost of living.
