Stubborn inflation is reaching tentacles into the retirement savings realm, as 48 percent of Americans recently surveyed by Betterment expect they’ll need to save at least $1 million for retirement. That figure is up from 37 percent in a similar 2024 Betterment study.
That extra cash needed to retire comfortably has triggered a bad case of financial anxiety among career professionals, with money angst rising from 71 percent in 2022 to 90 percent in 2025, the study reported.
The good news is that $1 million, if a worker can save that much, can go a long way in retirement.
“Total retirement savings of $1 million is likely good enough for many Americans, especially if their Social Security benefits are at least $25,000 per year,” Doug Carey, a chartered financial analyst at Indiana-based WealthTrace, told NTD News.
Carey said he’s found that a person with $1 million saved and $25,000 in Social Security benefits can comfortably spend about $75,000 per year if they retire at age 65. “However, for those people who are accustomed to spending $100,000 per year or more, this would most certainly not be enough savings,” he noted.
How to Get to the $1 Million Mark
Retirement planning experts advise taking these steps to get to the magical $1 million savings mark.
Leverage all retirement plan savings opportunities
There is no better way to get to $1 million than to max out contributions to a retirement plan.
“The contributions grow tax-free and for qualified plans can be deducted from taxes,” Carey said. “A person who saved $10,000 a year to a 401(k) for 40 years and earned a return of 7 percent per year would have $2 million when she retires.”
That figure doesn’t account for any company match that might be available. ”Add a company match of $2,000 per year, and you have $2.5 million at retirement. That’s the power of compounding at work,” Carey added.
Save by automating
Once you’ve maxed out on your employer's company savings plan, start setting aside discretionary income to build an investment account.
“That’s especially the case for younger individuals who may also want to save for a future home purchase,” Steven Rozencwaig, senior vice president for wealth management at Raymond James, told NTD. “This refers to money left over after covering monthly living expenses.”
By working with a trusted financial adviser, start creating a budget, determine how much to allocate, and set up automated transfers into a growth-oriented portfolio aligned with your risk tolerance. “Automating these contributions works similarly to workplace retirement plan funding,” Rozencwaig said. “In my experience, without automation, most people spend their extra cash rather than saving it. “
Wall off saved cash from spending
Deducting retirement savings cash from your paycheck before you have the opportunity to spend it is also essential to building long-term wealth.
“Essentially, once the money is out of sight, it’s out of mind,” said Robert Johnson, professor of finance at Heider College of Business, Creighton University.
Make sure the money is directly sent to a savings or investment account. “Making savings automatic is the best avenue,” Johnson told NTD. “Stashing the cash in a tax-deferred retirement vehicle (401k or IRA) makes the most sense as it allows the funds not only to compound without tax consequences, but it also lowers your taxable income.”
As usual, the numbers tell the tale when it comes to retirement savings.
If you deposited $450 per month in an account earning 10 percent compounded annually, you’d accumulate over $1 million in 30 years. “Total deposits would be $162,000 and total interest earned would be over $855,000,” Johnson noted. “The account would be worth $1,017,220 in 30 years.”
Don’t Make This Mistake With Retirement Financial Planning
Some of the biggest mistakes people make when saving for retirement are thinking of saving for retirement instead of both saving and investing for retirement. Another major error is taking either too little or too much risk. “Unfortunately, many people allocate retirement savings to money market accounts or low-risk bonds,” Johnson said.
According to data compiled by Ibbotson Associates, large-cap stocks (think the S&P 500) returned 10.4 percent compounded annually from 1926 to 2024. “Over that same time period, long-term government bonds returned 5.0 percent annually, and Treasury bills returned 3.3 percent annually,” Johnson added.
Other mistakes include delaying savings, missing the employer match, cashing out when changing jobs, and panic selling in downturns.
“High-fee products and constant trading quietly bleed returns and borrowing against retirement, loans, or hardship withdrawals, break compounding, and are hard to recover from,” Matt Schwartz, a mortgage broker at VA Loan Network, told NTD. “Many people also ignore taxes and healthcare costs, so their target is too low.”
The views and opinions expressed are those of the interviewees. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. NTD does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. NTD holds no liability for the accuracy or timeliness of the information provided.