There are a lot of areas of the U.S. where people actually do retire on $25K/year. Having said that, they probably own their home, have cheap Medicare and have paid all child-related expenses at that point. So you're right, for most 30 year olds it's a different story.

Also, even if people budget a $25K/year retirement there is always the possibility of needing long term nursing home care in the last years of life. (Say, if you're a football player that suffers dementia later in life.) Depending on the quality of care, that can wipe out even a $1M nest egg. It's a big financial concern at that age. It's not covered by insurance the way that, say, a heart attack or stroke is.