$1 Million Retirement Savings Yields $40,000 Annually, Study Shows

According to the 4% withdrawal rule, a $1 million retirement savings generates $40,000 yearly, less than half of the average American household's annual spending of $78,535 in 2024. Average Baby Boomer 401(k) balances stand at $267,900, well below the $1.26 to $1.6 million estimated needed for comfortable retirement. Healthcare spending has increased by $204 billion year-over-year, contributing to the decline in purchasing power. The Consumer Price Index rose from 308.417 in January 2024 to 335.123 in May 2026, indicating ongoing inflationary pressures impacting retirees’ savings.