How much should I save for retirement? Your top questions, answered
What we'll cover
How to calculate how much money you’ll need to retire
The factors that influence how much you’ll need
Savings strategies for retirement
When you think of your lifelong bucket list, what does it include? Adventures across another continent? Courtside tickets to watch your favorite NBA team play? No matter what dreams you’re chasing, one essential item probably sits at the top of your list: retirement. While it might not sound as exciting as traveling the world, retiring is the ultimate financial goal and ensuring you can tick off that box starts with saving now. But if “how much do I need to retire?” has been keeping you from getting started, you’ve come to the right place.
Calculate how much you'll need to retire
You may often hear that you need to save somewhere between $1 million and $2 million for retirement, but this is just a ballpark range. The real number you need depends on the age you plan to retire, when you will begin taking Social Security benefits and your desired lifestyle (hobbies, where you’ll live, travel) as a retiree.
Use this calculator to find out how much money you’ll need to retire.
To figure out how much you’d need to save in total, you can also use the 4% rule, which implies you should only use 4% of your total retirement savings each year in order to not run out of money. To use this formula, you divide your predicated annual spending by 4% — so if your predicted annual spending is $80,000, divide that by .04 to get a total of $2 million.
It’s important to note that the 4% rule should be used strictly for estimating your retirement needs. Depending on any investments and annual investment yields, as well as your Security Benefits and length of retirement, your actual amount will vary. Think of the 4% rule as a tool for setting general goals.
How much to save for retirement by age
The thought of saving a couple million dollars by your 60s or 70s can sound daunting, we know. That’s where breaking up your retirement savings with age-based benchmarks may help. By looking at your savings in five- or 10-year increments, it’s easier to plan financially and put actionable savings steps in place. One popular age-based savings recommendation is that you should aim to save one times your salary by age 30 and increase your savings by your annual salary every five years.
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