Figuring out the right amount of money needed for retirement feels like trying to solve a puzzle with missing pieces. As someone who’s spent countless hours researching this topic I can tell you there’s no “one-size-fits-all” answer. But don’t worry—I’m gonna break it down into manageable chunks that’ll help you determine what net worth you’ll need to retire comfortably.
The Surprising Shift in Retirement Numbers
People in the U.S. think they will need less money to retire in 2025 than they did in 2024, according to the Northwestern Mutual Planning 46 million reported in 2024.
But here’s the thing—these numbers don’t tell the whole story.
It’s Not About a Magic Number
As Aaron Cirksena, CEO of MDRN Capital, wisely points out: “It’s not about hitting some magic number, but it’s about how much your lifestyle costs and how long you need your money to last.”
That makes perfect sense. If you want to travel the world when you retire, you’ll need more savings than someone who just wants to stay home and garden. Everyone has different retirement needs.
What Factors Determine Your Retirement Number?
Several key factors influence how much you’ll need:
- Lifestyle expectations: Do you want to live simply or luxuriously?
- Geographic location: Planning to retire in Manhattan or rural Montana?
- Healthcare needs: Do you have chronic conditions that might require ongoing care?
- Longevity: How long do you expect to live? (Family history can provide clues)
- Inflation: The silent wealth-eroder that makes $1 today worth less tomorrow
- Market volatility: How your investments perform matters tremendously
Three Models to Consider for Your Net Worth Allocation
When planning for retirement, it helps to follow a structured approach. Financial Samurai outlines three net worth allocation models worth considering:
1. Conventional Asset Allocation
This traditional model works well if you’re planning to retire in your 60s and have normal risk tolerance. It suggests:
- In your 20s: 90%+ in stocks, minimal bonds
- By 30: Purchase a primary residence, keep 5% in risk-free assets
- By 40: More balanced between stocks/bonds and real estate
- By 60: Roughly equal weighting (30-35%) in stocks, bonds, and real estate
2. New Life Asset Allocation
If you’re looking to shake things up around age 40 (maybe start a new career or business), this model might be for you:
- By 30: Own your primary residence, 5% in risk-free assets
- By 40: Real estate accounts for 40% of net worth, start investing in alternatives
- By 60: Equal balance between stocks, bonds, and real estate (20-25% each), with about 10% in alternatives and 20% in your “X-Factor” (business ventures)
3. Financial Samurai Asset Allocation
For the entrepreneurial spirits who want to retire earlier from traditional employment:
- Late 20s: Get neutral real estate by owning your primary residence
- Early 30s: Begin building a side hustle
- By 40-50: Your business (X-Factor) becomes a significant portion of your net worth
- Throughout: Focus on building passive income streams through diversified investments
How Much Is Considered “Wealthy” in Retirement?
“Making it in retirement doesn’t mean having a lot of money,” says Linda Jensen, CEO of Heart Financial Group. “It means having freedom, security, and the ability to live the life you want without worrying about money.” “.
For some, $1. 5 million might be enough. Others might need $10 million or more. Financial institutions usually say that $5 million is high net worth and $10 million is very high net worth.
The 4% Rule is Outdated (What to Do Instead)
You’ve probably heard about the 4% rule—the idea that you can withdraw 4% of your portfolio annually in retirement without running out of money. But Jensen points out this rule is outdated due to:
- Current low bond yields
- Longer life expectancies
- Market volatility
Instead, today’s retirement income planning must be flexible, tax-efficient, and designed to withstand market volatility and inflation.
Avoid These Common Retirement Planning Mistakes
1. Too much cash
While keeping some money in cash provides security, inflation will erode its purchasing power over time. I’ve seen this happen to friends who were so scared of market downturns that they kept everything in savings accounts—only to watch inflation eat away their nest eggs.
2. Too heavily invested in stocks
On the flip side, retirees who invest too aggressively in stocks may face devastating declines during market downturns. Unlike younger investors who have time to recover from losses, retirees need to balance growth with capital preservation.
3. Having all your eggs in one basket
The average American has over 90% of their net worth tied up in their primary residence. This lack of diversification can be dangerous. I recommend having no more than 50% of your net worth in any one asset class after age 40.
A Different Approach: Net Worth by Age and Work Experience
Let’s look at some general guidelines for net worth based on age:
| Age | Conventional Model | New Life Model | Financial Samurai Model |
|---|---|---|---|
| 25 | 90% stocks, 10% bonds | 90% stocks, 10% bonds | 70% stocks, 20% bonds, 10% X-Factor |
| 35 | 50% stocks/bonds, 45% real estate, 5% risk-free | 40% stocks/bonds, 40% real estate, 15% alternatives, 5% risk-free | 30% stocks/bonds, 30% real estate, 35% X-Factor, 5% risk-free |
| 45 | 45% stocks/bonds, 50% real estate, 5% risk-free | 35% stocks/bonds, 40% real estate, 15% alternatives, 5% X-Factor, 5% risk-free | 25% stocks/bonds, 25% real estate, 45% X-Factor, 5% risk-free |
| 60+ | 60% stocks/bonds, 35% real estate, 5% risk-free | 45% stocks/bonds, 25% real estate, 10% alternatives, 15% X-Factor, 5% risk-free | 30% stocks/bonds, 20% real estate, 15% alternatives, 30% X-Factor, 5% risk-free |
What About the Average American?
If you’re curious about how you stack up against the average American:
- The median 401(k) balance is hovering around $120,000 in 2025
- The average 401(k) balance at retirement age 60 is only around $230,000
- The median household net worth is around $192,000
These numbers suggest many Americans will struggle to retire comfortably, even with Social Security benefits. If you add the average Social Security payment of ~$15,800 per year to a 4% withdrawal rate on $230,000, you get about $25,000 a year to live on.
That might be okay if your house is paid off and you have no major medical bills, but it’s not exactly living the dream. We need to do better!
My Personal Take on Retirement Planning
I’ve learned that retirement planning isn’t just about hitting a specific number—it’s about creating income streams that will last throughout my retirement years. Here’s what I’m doing:
- Diversifying across asset classes: I’m not putting all my eggs in one basket
- Building passive income: Through dividends, interest, and rental properties
- Developing side hustles: Creating income streams that don’t require my full-time attention
- Regularly reassessing my plan: Life changes, and so should my retirement strategy
Steps to Determine Your Personal Retirement Number
- Calculate your annual expenses: Track your spending for 3-6 months to get a realistic picture
- Factor in potential lifestyle changes: Will you travel more? Move to a cheaper area?
- Estimate healthcare costs: This is often underestimated—budget generously here!
- Account for inflation: Your purchasing power will decrease over time
- Consider longevity: Plan to live longer than you expect
- Add a buffer: For unexpected expenses and peace of mind
The Bottom Line
There’s no single “right” net worth to retire—it depends on your unique circumstances, goals, and risk tolerance. Instead of fixating on a specific number, focus on building diversified income streams that can support your desired lifestyle throughout retirement.
Remember what Cirksena said: “Start by mapping out your fixed and variable expenses, then add a buffer for health care, inflation and the unknowns. Don’t just plan for the averages and stress-test for the bad years.”
That’s solid advice I’m following myself. And I hope you will too.
What’s your retirement plan looking like? Have you calculated your personal “magic number”? I’d love to hear your thoughts in the comments below!
What Should My Net Worth Be At Age 50?
FAQ
Can you retire at 70 with $400,000?
It is 100% possible to retire with $400,000, provided you’re not looking to enjoy a particularly expensive retirement lifestyle or hoping to leave the workforce notably early.
How many Americans have $1,000,000 in retirement savings?
Approximately 2. 5% to 4. Seven percent of Americans have $1 million or more saved for retirement. Among retirees, that number is slightly higher (around 20 percent). 2%) and households with any retirement accounts.
What is the average net worth of a 62 year old American?
The average net worth for a 62-year-old American typically falls into the 55-64 age range, which shows an average net worth of around $1. 5 million to $1. 6 million, but the median net worth is significantly lower, around $364,000.
Is a net worth of $2 million enough to retire?
Yes, you can likely live on $2 million in retirement, but it depends on your specific circumstances, including your lifestyle, location, health, and when you plan to retire.
How do I know if my net worth is ready for retirement?
Median net worth may be a more useful figure when assessing your readiness for retirement. If you’re unsure how your net worth stacks up to what’s needed for retirement, schedule time with a financial advisor. An advisor can objectively assess your net worth, expected retirement income and spending needs.
How much money do you need to retire comfortably?
Americans believe the “magic number” they need to retire comfortably is $1. 26 million, according to a survey by Northwestern Mutual. Compare your number to the actual net worth of seniors who are retired. This will help you figure out if your long-term financial plan is reasonable and what kind of lifestyle you can expect in your golden years.
Does your net worth matter for retirement?
A higher net worth means you have more assets supporting you. A lower net worth suggests you may need to reduce debts or increase savings. Checking your net worth annually or when major life events occur can help you course-correct if needed. Your net worth matters for retirement because it represents what you have accumulated to support yourself.
Why is net worth important in retirement planning?
Net worth is a fundamental financial metric in retirement planning because it shows how much wealth you have accumulated and can use to support yourself after you stop working. The net worth varies according to a number of factors, including income and gender, but one of the major determinants is age.
Is your net worth a key metric in retirement planning?
As you approach retirement, your net worth is a key indicator of your financial preparedness. Net worth is a fundamental financial metric in retirement planning because it shows how much wealth you have accumulated and can use to support yourself after you stop working.
How can a net worth allocation help you live a comfortable retirement life?
If you divide your net worth in the right way for your age and work history, you’ll have a better chance of having a comfortable retirement. The key is to stay on track by following a net worth allocation model. Life tends to get complicated as we age. Bear markets come around every so often. As a result, it’s easy to get off track.