Many people are busy saving and investing for their retirement, aiming to stop working with a $1 million nest egg. Many others are busy saving and investing for their retirement knowing that they will never end up with anything close to $1 million. Are they doomed? Not necessarily.
Here’s a look at whether you might need $1 million by retirement, along with why many people get by retiring with far less.
Image source: Getty Images.
Setting the stage
First, understand that millions of people have simply not saved enough, according to this table based on the 2026 Retirement Confidence Survey:
|
Savings and investments* |
Percentage of workers |
|---|---|
|
Less than $1,000 |
22% |
|
$1,000 to $9,999 |
7% |
|
$10,000 to $24,999 |
7% |
|
$25,000 to $49,999 |
5% |
|
$50,000 to $99,999 |
11% |
|
$100,000 to $250,000 |
14% |
|
$250,000 or more |
35% |
Source: 2026 Retirement Confidence Survey.
*excluding the value of a primary home
Sure, plenty of these folks are not close to retirement, but plenty are in their 40s and 50s and even 60s, with very little in the way of savings. A 2025 survey by the Transamerica Center for Retirement Studies found that the typical retiree had only $126,000 in household savings.
Is $1 million enough?
Each of us is in a different situation. For some, a $1 million nest egg is great, while for others, it may be insufficient. But many people, if not most, would agree that retiring with just $126,000 is far from enough.
But remember that for most of us, our nest egg isn’t going to be providing all our retirement income. There’s Social Security income, too. The average monthly retirement benefit was $2,084 as of June — about $25,000 annually.
If your earnings have been above average, your benefits will be, too. For a much clearer estimate of your future benefits, set up a “my Social Security” account at the Social Security Administration (SSA) website.
So most of us will likely have at least two sources of income in retirement. But for the best results, you might aim to set up more sources than those. Here are examples of how you might wind up with multiple income streams:
|
Income source |
Annual income |
|---|---|
|
Social Security |
$30,000 |
|
Dividends from stocks |
$20,000 |
|
IRA and 401(k) withdrawals |
$15,000 |
|
Fixed annuity income |
$15,000 |
|
Total |
$80,000 |
You can get a rough idea of how much income your nest egg could provide by applying the flawed (but still helpful) 4% rule, which suggests that retirees can withdraw 4% from their nest egg in their first year of retirement and then adjust subsequent annual withdrawals for inflation. (There are other retirement withdrawal strategies to consider, as well.)
The table below shows how much you would withdraw under the 4% rule in your first year of retirement with nest eggs of various sizes:
|
Nest Egg |
4% First-Year Withdrawal |
|---|---|
|
$100,000 |
$4,000 |
|
$250,000 |
$10,000 |
|
$300,000 |
$12,000 |
|
$400,000 |
$16,000 |
|
$500,000 |
$20,000 |
|
$600,000 |
$24,000 |
|
$750,000 |
$30,000 |
|
$1 million |
$40,000 |
|
$1.5 million |
$60,000 |
|
$2 million |
$80,000 |
Source: Author calculations.
How do people retire with less than $1 million?
So, how are people retiring successfully with less than $1 million? There are multiple possible explanations:
- Their expenses may be relatively low. Perhaps, for example, they now own their home and don’t travel much.
- Their health may be reasonably good, not requiring major outlays for healthcare in retirement.
- They may live in an area with a low cost of living. There’s a huge difference in how far your money will take you if you live in, say, Kansas vs. California.
- They may have set up sufficient income streams, such as in the example above.
- Many might have been living on relatively little before retiring, and they’re doing so after.
If you’re still skeptical, know this: Millions of Americans retire with relatively little in the way of savings. And despite that, a Federal Reserve study found that fully 84% of adults 60 or older said that they are “doing OK or living comfortably.”
Better still, a 2026 Gallup survey found that while only 45% of non-retirees expected to have enough money to live comfortably in retirement, 82% of retirees reported having enough to live comfortably.
What to do
All that should be encouraging. It’s still true, though, that around 15% to 20% of retirees are not living very comfortably, and you certainly don’t want to end up in that group. So what can you do if you’re behind in your saving and investing for retirement?
- Save more aggressively and invest more effectively in the time you have left before retiring — perhaps via a low-fee S&P 500 index fund.
- Consider delaying retirement and working a few more years if you can to allow your nest egg to build up more. This will have the added benefit of reducing the number of years your savings will have to support you.
- Consider delaying claiming Social Security until age 70 if you can, because for most people, 70 is the best age at which to claim benefits to maximize them.
- You might take on a part-time job for your first few years of retirement.
- You could downsize, moving to a smaller home and perhaps selling one of your household’s cars.
- You might even relocate to a region with a lower cost of living.
- Think outside the box. If you need more income during retirement, you might take in a boarder, cash in a life insurance policy, or look into a reverse mortgage.
Whatever you do, be sure to have a solid retirement plan in place and act on it. Most of us will still aim to retire with a fat nest egg, but if you don’t get there, you’re not necessarily doomed.
