Prominent investment firms and news articles often suggest that to enjoy a comfortable retirement, you need to have $1 million saved up.

However, one well-known economist argues that much less is required—between $50,000 and $100,000 in total savings will suffice, according to real-life experiences of retirees.

In a column titled “You Don’t Need to Be a Millionaire to Retire,” Andrew Biggs from the American Enterprise Institute made this case in April’s The Wall Street Journal.

Many Americans retire without nearing the $1 million mark in their savings. The perception that such a substantial amount is necessary stems from various polls, personal finance advice, and a few commonly cited guidelines prevalent in the financial advisory field.

Financial advisers often recommend saving ten times your yearly salary to ensure a comfortable retirement, allowing you to withdraw 4% of your total savings annually. A widely circulated survey revealed that Americans believe they need around $1.46 million saved to retire comfortably.

Most Retirees Report They Are Managing Well

Biggs strongly disagrees with conventional wisdom. To support his argument, he examined data from the federal Survey of Household Economics and Decisionmaking conducted from 2019 to 2022.

The survey inquired about the financial well-being of Americans aged 65 to 74 who were at retirement age.

A significant majority, around 85%, reported they were doing just fine—living comfortably or at least managing reasonably well.

Only about 15% acknowledged facing financial difficulties.

This data is significant because most retirees possess far less than $1 million in savings. According to the federal survey, retirees happy with their financial situation typically have between $50,000 and $100,000 saved up.

“There is no evidence to support that seniors need even close to $1.46 million saved to feel financially secure,” Biggs stated.

From his perspective, retirees do not require nearly as much in savings as financial advisors often proclaim.

Biggs estimates that the average retirement couple who retired in 2022 would receive almost $46,000 annually in Social Security benefits. Although this may not seem overly generous, Biggs argues that it enables most couples to earn more than double the elderly poverty threshold without even utilizing their personal savings.

According to Biggs, retirement planners tend to exaggerate the income needs and spending of retirees, which serves to promote their own business.

Is $1.46 Million Necessary for a Comfortable Retirement?

The responses to Biggs’s article varied widely, sparking both support and criticism. Some readers praised his insights on social media, while others humorously remarked, “You don’t need to be a millionaire to retire and do nothing!”

Biggs, known as a conservative economist and a challenger of mainstream views, previously stirred controversy with a paper advocating for the elimination of the 401(k) retirement plan.

His latest claim—that retiring comfortably can be achieved without $1 million—contradicts the prevailing views in the retirement planning field.

“What about increasing healthcare costs?” queried Lili Vasileff, a certified financial planner in Greenwich, Connecticut. “What about adult children living rent-free with their elderly parents? What happens in the case of divorces later in life that split assets just before retirement?”

One of the most controversial claims from Biggs is the assertion that only a minority of retirees face financial struggles.

Alicia Munnell, director of the Center for Retirement Research at Boston College, and a previous collaborator with Biggs, asserts that at least 40% of retirees encounter financial hardships.

According to the 2022 federal Survey of Consumer Finances, when asked how they would manage a financial emergency, only 58% of seniors believed they could depend on their savings. This, to Munnell, illustrates the financial insecurity many retirees experience.

You Don’t Want to Admit, ‘I Made a Mistake’

So why did only 15% of seniors in Biggs’s mentioned survey report financial struggles?

Munnell speculates that retirees might be hesitant to reveal their financial troubles when asked in surveys.

“When asked about their well-being, people often feel a sense of pride,” she explained. “No one wants to admit, ‘I really messed up.’”

While Munnell disagrees with Biggs’s assessment of retirees’ financial health, she commends his view that a million dollars isn’t a necessity for a comfortable retirement.

“It’s unhelpful to promote unrealistic savings targets or to overstate how much money is needed for a secure retirement,” she stated.

Hetting a million-dollar retirement can be a daunting objective, Munnell believes, as most individuals do not retire with such wealth.

What is the Actual Retirement Savings of Retirees?

According to data from the 2022 Survey of Consumer Finances, seniors aged 65 to 74 who have retirement accounts typically save around $200,000.

However, only about half of these seniors report having any retirement accounts at all.

Biggs and his team have differing opinions on this matter. Biggs asserts that many seniors possess other types of savings and pensions. Munnell, on the other hand, thinks Biggs is overly optimistic about the financial security of American retirees.

“I don’t know people who have retirement savings without a retirement account,” she remarked.

Experts typically suggest that individuals will require approximately 80% of their pre-retirement income during retirement.

According to the Social Security Administration, Social Security only covers about half of this income requirement. Therefore, saving is encouraged for a comfortable retirement.

A common guideline suggests saving ten times your annual salary to complement Social Security benefits. For an average American household, this equates to nearly $750,000, based on the median household income of $74,580.

Additionally, there’s the 4% rule, which advises retirees to withdraw 4% of their savings yearly to cover living expenses, adjusting for inflation each year.

Some experts argue that 4% might be too low, while others believe it is too high. Regardless, the takeaway is clear: to survive on a small percentage of your retirement savings, you will need a substantial amount overall.

Retirees Tend to Cut Spending as They Get Older

Biggs argues that such guidelines largely serve to help investment firms market their products and to drive traffic to personal finance websites.

He questions the 80% rule, believing that not many retirees will spend that high a percentage of their working income during retirement.

“For many years, 70% was the accepted average for middle-income retirees,” he noted in an email to YSL News, “and it has gradually increased without strong evidence to support it.”

The 4% rule is a bit harder to critique, he stated, but “one thing we do know is that retirees tend to significantly lower their spending as they get older.” Biggs observed that older retirees travel less, eat less, and spend less on their children. While medical expenses increase, most are covered by insurance.

Professionals in retirement advising state that these estimations are meant to be hopeful benchmarks for individuals planning for retirement.

“These guidelines are beneficial for people early in their careers and those in mid-career,” stated Douglas Ornstein, a director with TIAA Wealth Management, a financial services nonprofit. “However, once you’re about five years from retirement, these rules may not be very useful anymore.”

Financial advisers emphasize that each retirement is unique. Some retirees still have mortgage payments or are financially supporting grandchildren, while others carry no debt or dependents.

“If you’re in Manhattan, yes, you likely need a million dollars or more,” stated Christopher Lyman, a certified financial planner in Newtown, Pennsylvania. “On the other hand, in rural Lancaster, Pennsylvania, where there’s less activity, having $50,000 might be sufficient.”