Why "just save $1 million" is the wrong answer for most people
The standard retirement savings advice — save 10–15% of your income, aim for $1 million, use the 4% rule — was built on historical averages and generalized assumptions. It doesn't account for your actual spending pattern, your healthcare needs, whether you'll carry a mortgage into retirement, when you plan to claim Social Security, or how long you're likely to live. For most people, the generic number is either far too low or needlessly intimidating, and both outcomes cause real harm: one leads to underpreparing, the other to paralysis.
The 4% rule — the most widely cited retirement formula — was developed by financial planner William Bengen in 1994 using historical stock and bond returns. It suggests that if you withdraw 4% of your portfolio in year one and adjust for inflation each year after, your money should last 30 years in nearly all historical scenarios. That research was sound for its time. But more recent analysis from Morningstar and others finds that today's lower-yield bond environment may push the sustainable withdrawal rate down to 3.3%–3.8%, particularly for people retiring in their early 60s who need their savings to last 35+ years. The number you need, in short, is likely higher than the old formula suggests.
The most overlooked variable is healthcare. Fidelity's 2025 Retiree Health Care Cost Estimate puts the total healthcare tab for a 65-year-old couple at roughly $330,000 in today's dollars — and that figure doesn't include long-term care, which Medicare won't cover. When people ask "how much do I actually need," they almost always forget to include this category, which is exactly where retirement plans most commonly unravel.
The retirement savings question looks different depending on where you are
This problem shows up differently depending on your age, income, and how far along you are in the planning process — picking the version closest to yours will help you cut through advice that doesn't apply.
Getting this wrong doesn't just affect retirement — it affects the decades leading up to it
Underestimating how much you need means you might retire into real financial stress — scaling back in ways you didn't plan for, returning to work when you no longer want to, or depending on family members. But overestimating can cause its own damage: people who believe they can never reach the "right number" sometimes give up saving meaningfully altogether, or delay retirement for years past when they could have stopped safely. Both errors are common, and both are largely preventable with a clearer, more personalized calculation. The evidence is consistent that most people benefit from planning with specific numbers tied to their actual expected spending, not a generic target.
According to the Employee Benefit Research Institute's 2025 Retirement Confidence Survey, 44% of retirees report spending more than expected in the first years of retirement — and healthcare costs are the most commonly cited surprise. Building a retirement number without a serious healthcare line item is one of the most consistent planning errors the data reveals.
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What others have experienced
214 community experiences-
DM
I had $820,000 saved and thought I was close. Then I actually sat down and built a real budget for retirement — what I'd spend on housing, food, travel, and especially healthcare — and realized I'd never seriously accounted for insurance costs before Medicare kicks in at 65. I'm retiring at 62, so there's a three-year gap where I'd be paying full premiums. That alone changed my number by nearly $90,000. I'm glad I found out before I handed in my notice.
47 found this helpful -
RK
Honestly the most useful thing I did was stop asking "do I have enough" and start asking "what will I actually spend." My wife and I went through a full 12-month spending exercise — tracking everything — and our real number was about 20% less than we assumed. We'd been budgeting for a lifestyle we wouldn't actually want in retirement. Once I modeled our real spending against Social Security and our savings, the picture looked much better than the headlines made me feel it would.
62 found this helpful -
TN
I kept reading that I needed $1.5 million and felt completely defeated — I'm 54 with about $310,000 saved and a modest income. What helped was learning that Social Security replaces a much higher percentage of pre-retirement income for lower earners than for higher earners. When I actually ran my Social Security estimate on ssa.gov and factored in delaying to 70, the gap between what I had saved and what I needed looked way more manageable. I'm not out of the woods, but I stopped feeling like it was hopeless.
83 found this helpful
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