You do not automatically need $1.2 million saved by retirement. That figure is the average amount surveyed workplace-plan participants said they would need to retire comfortably, not an official U.S. requirement.
Schroders' 2026 U.S. Retirement Survey covered 1,500 investors ages 30–79 and was fielded from March 20 through April 15. The $1.2 million finding applies specifically to 615 participants in 401(k), 403(b), or 457-type workplace plans.
Table of Contents
- What income could $1.2 million provide?
- How should you calculate a personal target?
- Why are many workers below the target?
- What can you do now?
What income could $1.2 million provide?
Fidelity estimates that retirees may sustainably withdraw about 4%–5% of savings initially, then adjust withdrawals for inflation. Under Fidelity's withdrawal guideline, $1.2 million could provide roughly $48,000–$60,000 during the first year.
That amount is before taxes and separate from social security or pension income. It is a planning range, not a guarantee, because returns, retirement length, and withdrawal timing can change the outcome.
How should you calculate a personal target?
Vanguard identifies retirement age, spending, longevity, investment returns, social Security, pensions, and health coverage as major variables. Start with the income your savings must provide rather than adopting $1.2 million as a pass-or-fail threshold. For example, someone expecting $70,000 in annual spending and $30,000 from benefits has a $40,000 portfolio-income gap.
A 4%–5% initial withdrawal range suggests approximately $800,000–$1 million in savings. Fidelity offers another reference point: 10 times preretirement income by age 67. That guideline assumes saving 15% annually from age 25, investing more than half in stocks, and maintaining a similar lifestyle, so it will not fit everyone.
- Estimate your first year of retirement spending.
- Subtract expected Social Security and pension income.
- Divide the remaining annual gap by 0.04 and 0.05 to create a preliminary range.
- Test the result against different retirement ages, spending levels, and investment outcomes.
Why are many workers below the target?
The survey found that 51% of workplace-plan participants expected to retire with less than $500,000, including 24% expecting less than $250,000. Only 30% expected to reach $1 million, according to Schroders' retirement-readiness results.
Costs are also limiting contributions. Among participants, 69% said retirement felt out of reach for their generation, while 55% could not save 10% of pay because other expenses took priority. Health care, utilities, insurance, and housing were prominent concerns.
What can you do now?
Obtain a retirement-benefit estimate from the Social Security Administration before finalizing your savings target. Benefits may start at 62 at a reduced amount, while delaying beyond full retirement age increases the benefit until age 70. Next, compare your current payroll contribution with what your budget can support.
For 2026, employees may defer up to $24,500 into eligible 401(k), 403(b), and governmental 457 plans, according to the IRS's 2026 contribution-limit notice. The general catch-up limit for workers age 50 or older is $8,000. Participants ages 60–63 may qualify for an $11,250 catch-up, allowing them to direct more of their final working-years' income toward retirement.