What’s Considered a Good Nest Egg for Retirement? (2025 Numbers You Need to Know)

It can be hard to save for retirement because the goal is always moving. How much is enough? Will I end up eating cat food in my old age? (I hope not!) Let’s clear things up and find out what a good nest egg for retirement in 2025 looks like.

The Million-Dollar Question (Literally)

According to recent data from Northwestern Mutual’s 2023 Planning & Progress Study, Americans believe they’ll need about $1.27 million to retire comfortably. That’s up from $1.25 million just a year earlier. But here’s the kicker – most folks have only saved around $89,300 so far.

There’s a big hole there, but don’t worry—let’s look into what makes a “good” nest egg.

What Is a Good Retirement Nest Egg?

The truth is, there’s no one-size-fits-all answer. A $500,000 nest egg might be perfectly adequate for some retirees, while others may need substantially more. It depends on several factors:

• Where you’ll live (think cost of living)
• Your expected lifestyle in retirement
• Health considerations
• How many dependents you have
• Other income sources (Social Security, pensions, etc.)

How Much Americans Think They Need by Age

It’s interesting to see how retirement savings expectations vary by age group. According to Northwestern Mutual’s study:

It’s interesting that people in their 50s think they need the most money, while people in their 60s (who are getting closer to retirement) don’t think they need as much. Maybe they’ve made more detailed plans, or maybe they’re being honest about how much time they have left to save.

What’s the Average Retirement Nest Egg?

Let’s look at what Americans actually have saved by age

According to Vanguard data, the average 401(k) balances by age are:

For all age groups combined, the median retirement savings is about $87,000. That’s… not great, considering the million-plus most people think they need.

The Upper Class Retirement Picture

If you’re curious about what the wealthy have stashed away, here’s a peek:

• The top 10% of earners have a median retirement savings of $900,000
• Those in the 75th-89.9th percentile have a median balance of $269,000

The wealthiest 20% of Americans typically have retirement savings between $400,000 and $500,000 – far above the national median.

How Do I Know If My Nest Egg Is Big Enough?

One practical rule of thumb is the 4% rule. To use it:

1. Figure out how much annual income you’ll need from your savings
2. Divide that number by 0.04 (or multiply by 25)

For example, if you need $25,000 per year from your savings, your nest egg should be at least $625,000 ($25,000 ÷ 0.04).

Another approach is to aim for a multiple of your annual salary based on your age:

• By age 30: 1x your salary
• By age 40: 3x your salary
• By age 50: 6x your salary
• By age 60: 8x your salary
• By age 67: 10x your salary

Why Most People Are Behind (And What You Can Do)

I won’t sugarcoat it – most Americans aren’t on track for a comfortable retirement. But don’t despair! There’s still hope if you’re behind.

Start Saving Early (Or Start Now)

The power of compound interest is no joke. The earlier you start, the less you need to save each month to reach your goals. But if you haven’t started yet, the best time is NOW.

Increase Your Savings Rate

Most financial experts recommend saving 15% of your income for retirement. If that seems impossible, start with whatever you can and gradually increase it. Even a 1% increase makes a difference over time.

Max Out Employer Matches

If your company matches your 401(k), use it! It’s like getting money for free. For instance, if they match up to 60% of your contributions, that’s at least 6% of your salary.

Invest Wisely

Don’t just save – invest. The wealthy control nearly 93% of the stock market for a reason. Over the long term, investing in a diversified portfolio has historically outperformed simply saving.

Consider Working Longer

Working even a few extra years can significantly boost your retirement security by:

• Giving your investments more time to grow
• Shortening the period you’ll need to rely on savings
• Potentially increasing your Social Security benefits

Delay Taking Social Security

For each year you delay taking Social Security (up to age 70), your benefits increase by about 8%. That’s a guaranteed return you can’t get anywhere else!

Realistic Retirement Income Needs

How much will you actually need in retirement? Most experts suggest aiming for 70-80% of your pre-retirement income.

So if you currently earn $50,000 annually ($4,167 monthly), you’ll need approximately $35,000-$40,000 per year in retirement.

According to the Bureau of Labor Statistics, the average retired household spends about $48,791 annually, or roughly $4,066 per month.

Is $1 Million Really Enough?

With inflation and rising healthcare costs, that million-dollar mark might not be as comfortable as it sounds. Consider:

• A 65-year-old couple retiring today can expect to spend about $315,000 on healthcare costs alone throughout retirement
• Many Americans underestimate how long they’ll live (and thus how long their money needs to last)
• Inflation will continue to erode purchasing power

That said, one out of six retirees do have at least $1 million saved. It’s achievable with disciplined saving and investing over time.

My Thoughts on Building Your Nest Egg

Here’s what I think: Instead of fixating on a specific number, focus on maximizing what you can save based on your unique situation.

We all have different lifestyles, health considerations, and retirement dreams. Maybe you wanna travel the world, or perhaps you’re happy puttering in your garden. Your retirement nest egg should reflect YOUR goals.

I’ve seen people retire comfortably on much less than $1 million because they:

• Paid off their mortgage before retiring
• Moved to a lower-cost area
• Developed fulfilling, inexpensive hobbies
• Maintained good health (reducing healthcare costs)

Practical Steps to Build Your Nest Egg

1. Set realistic goals. Don’t try to save too much too quickly. Start with a small goal and gradually increase it.

2. Automate your savings. Set up automatic transfers from your checking account to your retirement account. You won’t miss what you don’t see!

3. Take advantage of catch-up contributions. If you’re over 50, you can make additional “catch-up” contributions to your retirement accounts.

4. Consider a Roth IRA. Tax-free growth and withdrawals in retirement can be incredibly valuable.

5. Diversify your investments. Don’t put all your eggs in one basket (pun intended for our nest egg discussion!).

6. Get professional help. A financial advisor can provide personalized guidance based on your specific situation.

Final Thoughts

Building a sufficient nest egg for retirement is a marathon, not a sprint. Don’t get discouraged if you’re not where you think you should be. The most important thing is to start where you are and make consistent progress.

Remember, the “right” amount for retirement varies widely depending on your personal circumstances. What matters most is having a plan and sticking to it.

And hey, if all else fails, there’s always the lottery! (Just kidding – please don’t make that your retirement plan.)

So, what do you think? Are you on track for your retirement goals? Have you started building your nest egg? I’d love to hear your thoughts and experiences in the comments below!

FAQ About Retirement Nest Eggs

How much does the average 70-year-old have in savings?

According to Federal Reserve data, the average amount of retirement savings for 65- to 74-year-olds is just over $426,000.

What percentage of retirees have a million dollars?

About one out of six retirees have retirement savings of $1 million or more.

Is $150,000 a good retirement income?

For someone with a pre-retirement income of $150,000, experts suggest they would need around $120,000 per year (80%) to maintain their lifestyle in retirement.

How much should I have saved by age 55?

Experts recommend having at least seven times your annual salary saved by age 55. So if you make $55,000 a year, you should aim for retirement savings of at least $385,000.

What is the 4% rule in retirement?

The 4% rule suggests that you can withdraw 4% of your retirement savings in your first year of retirement, then adjust that amount for inflation each subsequent year, with a high probability that your money will last for at least 30 years.