Core Insights - Achieving a $1 million balance in a 401(k) is significant, but it may not be sufficient for retirement, as the income replacement ratio is a more reliable measure of financial readiness [2][3] - A 2025 survey indicates that Americans believe $1.3 million is the ideal retirement savings target, yet nearly half anticipate retiring with less than $500,000, highlighting a disconnect between perception and reality [3][4] - The average 401(k) balance for Gen Xers is approximately $190,000, while Boomers nearing retirement average about $250,000, which translates to only about $10,000 annually at a 4% withdrawal rate, insufficient for most households [4] Income Replacement Ratio - Traditional financial advice suggests aiming to replace 75% of final after-tax salary, with some planners recommending a higher target of 80% to 85% [6] - Social Security benefits typically replace around 40% of pre-retirement earnings, with lower-income workers receiving a higher percentage, necessitating additional savings to cover at least 45% of pre-retirement income for households without pensions [7] - Most households should target a replacement of 70% to 85% of pre-retirement income, combining savings withdrawals with Social Security benefits [8] Personalization of Retirement Planning - Individuals should calculate their own income replacement ratio by subtracting projected Social Security and pension income from their target percentage, determining the annual withdrawal needed from their savings [9]