Saving for retirement is something every American needs to do, but not that many Americans are great at actually doing. In fact, according to the 2024 Northwestern Mutual Planning and Progress Study, Americans anticipated they would need $1.46 million to retire comfortably, while they had just $88,400 saved for retirement currently. This left a $1.37 million gap between the amount people believe they will need for a secure future and the amount they actually have.
Americans are not wrong to assume they’ll need a large nest egg, topping $1 million. The reality is that Social Security replaces only 40% of pre-retirement income, and $1 million in an investment account only provides around $40,000 at a safe withdrawal rate. Since most people need to replace around 80% to 90% of pre-retirement earnings, even $1.46 million may not cut it — especially for those who are retiring many years into the future and who will see their buying power decline due to inflation.
The good news is, there’s one surefire habit that can help Americans save more for their golden years and have the secure future they deserve. Here’s what it is.
Doing this can help double your retirement savings
So what’s the habit that doubles your retirement savings? It’s simple: Working with a financial advisor.
Financial advisors can help you at all phases of your financial journey, working with you to create a plan for retirement and to increase your overall financial stability and open up the door to being able to save and invest more to make that plan a reality.
Northwestern Mutual’s data was very clear on how much better people who have advisors do with retirement investing compared with those who don’t have professional advice. Specifically, the survey showed that survey respondents who had an advisor had double the amount saved for retirement.
While Americans without advisors had an estimated $62,000 in retirement savings, those with an advisor had $132,000.
As big as that gap is, when you consider the impact of compound interest, the discrepancy in how much each investor will end up with becomes even more apparent.
Say, for example, that you manage to save that $132,000 by the age of 45 thanks to getting professional financial advice. If you earn a 10% annual return for the next 20 years until age 65, you’d have $888,029.99 even if you never contributed another dime. By comparison, compound growth on $62,000 would give you only $417,105.00 over two decades.
This goes to show that the sooner you work with an advisor and start building up a reasonable investment balance, the greater the impact their assistance can have on your long-term future.
The “Advisor Advantage” Explained
The quantifiable gap between advised and unadvised savers often stems from what industry researchers call “behavioral alpha.” A hallmark study by Vanguard estimates that professional wealth management can add up to roughly 3% in net annual returns through structural optimization and behavioral coaching. Instead of letting emotional reactions dictate portfolio changes during market downturns, advisors enforce disciplined wealth management strategies.
This structural value is driven by three distinct mechanisms:
- Tax-Loss Harvesting: Systematically offsetting capital gains with realized losses to lower net tax liabilities.
- Asset Location Optimization: Placing high-yield bonds and income-generating assets inside tax-deferred accounts while allocating pure equity growth to tax-exempt Roth accounts.
- Dynamic Rebalancing: Automating portfolio realignments when drifting market segments skew a user’s chosen risk threshold.
Why is working with an advisor so helpful?
Working with a financial advisor can make a huge impact on your retirement savings because getting professional advice to learn how to manage your money more effectively can impact every aspect of your finances.
Let’s take a look at some more data from Northwestern Mutual’s survey that shows differences in the behaviors engaged in by those with an advisor versus by people without one.
| How many Americans engage in different kinds of financial behaviors | ||
|
With an advisor |
Without an advisor |
|
|
Have a long-term plan that factors in up-and-down economic cycles over time |
79% |
38% |
|
Have an emergency fund |
84% |
48% |
|
Feel financially secure |
64% |
29% |
|
Have good clarity on how much they can afford now vs. save for later |
79% |
60% |
|
Have taken a step to address the possibility of outliving life savings |
83% |
53% |
|
Have a specific plan to pay off debt |
79% |
49% |
|
Have inflation factored into your financial plan |
69% |
48% |
|
Have a plan to address health care costs in retirement |
69% |
38% |
|
Will have enough to leave behind an inheritance or charitable gift |
64% |
33% |
Source: Northwestern Mutual
Advanced Savings Frameworks and the Asset Waterfall
To reach multi-million dollar nest eggs, individuals can track their savings velocity via formal milestone frameworks. Widely used benchmarks outline specific multiples of salary that should be secured by milestone birthdays: saving one times your annual salary by age 30, three times by age 40, six times by age 50, and eight times by age 60.
Reaching these targets requires a clear financial hierarchy for incoming capital, commonly executed as an asset waterfall plan:
- Capture the Corporate Match: Maximize employer 401(k) allocations up to the matching ceiling before routing funds elsewhere.
- High-Interest Debt Eradication: Repay all revolving debt obligations carrying interest rates over 7%.
- Maximize the HSA: Max out contributions to a Health Savings Account to exploit its unique triple-tax exemption.
- Fund Individual Retirement Accounts: Maximize annual limits inside Traditional or Roth IRAs depending on tax brackets.
- Max the Unmatched 401(k): Return to the primary workplace 401(k) to save all remaining capital up to full legal thresholds.
Modern Safe Withdrawal Rates and Distribution Risks
While maximizing growth is essential, distribution requires navigating sequence-of-returns risk. Sustaining a steep market crash during the first three years of retirement threatens portfolio longevity far more than experiencing a crash fifteen years later. To counter this, modern asset management often uses a flexible strategy like the Variable Percentage Withdrawal system, which alters annual spending caps based on real-time market performance rather than adhering to a rigid 4% rule.
Navigating the Advisory Landscape
Securing advisory support does not mandate a singular structure. Savers can choose from a broad landscape tailored to net worth and portfolio complexity:
- Robo-Advisors: Ideal for early accumulation phases, providing digital-only rebalancing and automated tax optimization for low fees around 0.25% of assets under management.
- Flat-Fee or Hourly CFPs: Best for hands-on, self-directed investors requiring a one-time structural blueprint or an objective second opinion for flat fees typically ranging from $1,500 to $3,000.
- Traditional AUM Advising: Designed for high-net-worth households managing interlocking estate, trust, and pass-through entity structures for an asset-based fee scaling downwards from 1.00%.
Fiduciary Verification: Financial consumers should check regulatory databases via the SEC’s Investment Adviser Public Disclosure or FINRA’s BrokerCheck to ensure any chosen manager operates under a legal fiduciary standard, legally binding them to act solely in the client’s financial interest.
As you can see, advisors don’t just give you tips on saving for retirement. They help set you up to ensure you can make and carry out plans by working with you to improve your overall financial situation.
If you want to make sure you have the money habits that will allow you to save and invest so you have the funds to actually enjoy your retirement free of financial worries, it’s worth exploring the possibility of working with an advisor ASAP. You can get started on making compound growth work for you and can close that gap between your retirement dreams and your retirement reality.
Editor’s Note: This article has been updated to include analysis of the Vanguard Advisor’s Alpha study on wealth management returns, structured age-based savings metrics, sequential wealth allocation waterfalls, and modern portfolio withdrawal strategies like Variable Percentage Withdrawal. A comparative summary of robo-advisors, hourly Certified Financial Planners, and traditional asset-under-management fee structures has also been added, along with consumer verification links for checking fiduciary credentials via the SEC and FINRA databases.
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