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For most Americans, the “magic number” for retirement is $1.26 million, according to Northwestern Mutual. (1)
But it’s easy to forget that retirement isn’t really about hitting a specific dollar target — it’s about replacing your income so you can sustain your lifestyle without working.
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This crucial difference was highlighted in JPMorgan Asset Management’s 2025 Guide to Retirement. (2) The banking giant’s guide shows that many people can retire comfortably if they shift their attention away from becoming millionaires to simply replacing their current income.
Here’s a closer look at the underlying calculations.
If your primary objective is to replace your current income, then you’ll require a more modest amount for retirement if you’re lower or middle income.
JPMorgan’s report shows that households with relatively low income can rely more on Social Security benefits and employer-backed private retirement schemes, replacing their current earnings, relative to higher earners. A family earning $300,000, for instance, could see only 55% of their income replaced by these sources.
Therefore, according to JPMorgan’s calculations, for households with annual income of $125,000 and above, a seven-figure savings target could be justified.
Their income replacement calculations suggest that for households with income below $90,000, you can maintain an equivalent lifestyle in retirement with a 5% annual gross savings rate, or $4,500 per year. The average personal savings rate for Americans was 4.6% in August, according to the Bureau of Economic Analysis. (3)
Meanwhile, for households making $100,000 or more, JP Morgan’s analysis uses a 10% annual gross savings rate instead.
While those may seem like lofty numbers, there are ways to grow your savings in the background to easily build wealth for retirement.
With Acorns, every purchase on your credit or debit card is automatically rounded up to the nearest dollar, with the excess placed into a smart investment portfolio.
Let’s say you purchase a doughnut for $2.30. Before you’re done licking the sugar off your fingers, Acorns will round the amount to $3.00 and invest the 70-cent difference for you.
