A million used to be the magic number for retirement. Then inflation, longer lifespans, and rising healthcare costs moved the goalposts. These days, plenty of people are aiming for $2 million — or even $2.5 million — just to feel secure. But while that might seem like the new benchmark, the reality is that very few people actually reach it.
According to the Employee Benefit Research Institute's analysis of Federal Reserve data, just 1.8% of U.S. households have at least $2 million in retirement savings. And when you push that to $2.5 million, the number shrinks even further — somewhere between the 1.8% with $2 million and the 0.8% with $3 million.
In other words, if you're chasing $2.5 million, you're entering rare territory.
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For context, the median retirement savings across all households is $87,000. The average is about $333,940, skewed higher by wealthier households. Even among retirees aged 65 and up, the average balance is just $573,624 — and the median is still far below seven figures.
So why is $2.5 million such a tough milestone to hit?
It's not just about financial literacy or discipline. Hitting that number usually requires starting early, saving consistently, and investing aggressively for decades — all while earning enough to cover rising living costs. That kind of financial runway isn't available to most Americans.
Still, what does $2.5 million really mean for your retirement?
Quite a bit, actually. Using the common 4% rule, $2.5 million could generate $100,000 per year — not including Social Security or other income. That's enough to cover a comfortable lifestyle in most of the U.S., even with room for healthcare, housing, and the occasional splurge.
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It also puts you in an elite group. While the number might not feel extravagant in 2025 terms, the truth is very few retirees reach it — and those who do sit well inside the top 2% of retirement savers.
If you're retiring at 65 and plan to live another 25 to 30 years, $2.5 million can stretch far — but only if you manage it carefully. At $100,000 per year, you're right on pace with the 4% rule. Add in Social Security — which averages around $1,900 per month or roughly $23,000 annually — and you're looking at over $120,000 in income. That's more than enough to cover essentials and extras in most areas, even factoring in healthcare and inflation.
Now, if you retire earlier — say, at 62 — the math gets trickier. You'll need to stretch that money over more years, and you may receive reduced Social Security benefits. For early retirees, $2.5 million might need to last 30 to 35 years. That lowers the safe withdrawal rate closer to 3.5% or less, meaning your annual draw would be closer to $87,500 to avoid running out too soon.
And then there's inflation. Over the last 30 years, inflation has averaged just over 2.5% annually. But in recent years, it's been higher. That means today's $100,000 might not buy the same lifestyle 20 years from now — which is why many retirees invest a portion of their portfolio for growth even after they stop working.
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The upside? With $2.5 million, you have options. You can travel. You can move to a lower-cost area. You can handle unexpected bills without panic. But it takes planning — and getting there in the first place is the biggest hurdle.
If you're already there — or even beyond it — that's something to be proud of. It usually takes years of focus, patience, and consistent effort to reach that point.
But if you're not quite there yet, that doesn't mean you're off track. Everyone's retirement number is different, and $2.5 million might not even be your goal. What matters is having a plan — saving steadily, investing wisely, and adjusting along the way. And if you're unsure what your target should be or how close you are, it's worth checking in with a financial advisor who can help tailor a strategy that actually fits your life.
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