Despite what traditional financial advice might dictate, the average retiree isn’t sitting on a million-dollar nest egg. A recent report from the Transamerica Center for Retirement Studies found that only 17% of current retirees have total household savings of $1 million or more, excluding home equity. Here’s how much the average retiree actually has saved, plus where they’re keeping their money. Average Retirement Savings: Just $126K The report found that the estimated median total household savings f ...

As your income changes, so do your unique financial needs. But that doesn’t mean some general guidelines may not be helpful in planning your monthly budgets for 2026. Read on for advice from some money experts with general tips for financial growth at different income levels. No Income or Unemployed and Seeking Employment “Focus first on getting your immediate needs met,” said Annie Cole, money coach and founder of Money Essentials for Women. “Explore resources like unemployment benefits, SNAP food bene ...

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]

Group 1 - The article discusses a structured approach to retirement planning, emphasizing actionable steps to retire by 2026 [1] - It introduces the 4% withdrawal rule, which suggests that individuals should multiply their annual spending by 25 to determine their target savings amount [2][3] - Examples provided indicate that to support an annual spending of $40,000, one needs approximately $1 million saved, while $50,000 requires $1.25 million, and $70,000 necessitates $1.75 million [2] Group 2 - The focus for 2025 should be on confirming income sources for retirement, categorized into Social Security and personal savings [4] - Individuals are advised to create a My Social Security account to estimate their benefits, with options to claim reduced benefits at age 62, full benefits at full retirement age, or maximum benefits at age 70 [5] - A comprehensive list of savings, including 401(k) plans, IRAs, pensions, and HSAs, is recommended to form an "income stack" [6] Group 3 - A withdrawal strategy is essential before retirement, detailing how to access funds from different accounts at various ages [7] - The strategy suggests withdrawing from taxable brokerage accounts first between ages 59 to 65, preserving Roth IRAs for later use, and converting small amounts from 401(k) or IRAs to Roth to minimize future taxes [8] - After age 65, individuals should increase withdrawals from 401(k) and IRAs and begin Social Security benefits between ages 65 and 70, highlighting the importance of sequencing for tax efficiency and longevity of funds [8]