How Much Do I Need To Retire Comfortably?

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Want to retire comfortably? Figure out how much money you need in your savings to reach this goal.

Some people think they need to save millions of dollars to retire and maintain a comfortable lifestyle. Others think they only need $200,000. So, how much money do you actually need?

The answer may surprise you. In this blog post, we’ll break down how much money you ideally should have saved, based on factors such as your current age and desired retirement lifestyle. We’ll also provide some actionable tips to help get you on track and grow your ‘dough’.

If your goal is to retire without having to penny-pinch and worry about running out of money, read on to learn everything you need to know about saving for retirement.  

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What Is The Minimum Amount of Money I Need To Save To Retire?

There’s unfortunately no one-size-fits-all answer to this question since there are many factors to consider. For example, the kind of lifestyle you want to live in your retirement years, how soon you plan on retiring, and whether you’d still be making money during those years. But according to experts at Fidelity, generally speaking, you want to aim to save at least 15% of your annual pre-tax income to be able to live comfortably in your golden years ⁠— assuming you save from ages 25 to 67, and only spend around 55% to 80% of your pre-retirement income to maintain your lifestyle during retirement.

But is 15% really enough? Well, it depends on a few factors.

Your lifestyle in retirement

Let’s say Jane is 30 years old with an annual salary of $70,000 and plans on retiring at 55 to explore every single country on Earth and stay at five-star hotels everywhere she goes. Would the 15% guideline work for her? Very unlikely.

To maintain a rather luxurious lifestyle in retirement, she’ll need to increase her monthly income, invest aggressively, and save as much money as possible. On the other hand, Amy is 23 with a current income of $65,000 and plans to retire at 60 to live a modest and minimalist lifestyle in the countryside. Would the 15% guideline work for her? Very likely!

Generally speaking, if you expect your cost of living and retirement expenses to be more than they are now, saving 15% probably won’t be enough. Consider potential economic changes such as inflation rates; today’s dollars might not retain the same value in the future.

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When you plan on retiring

The longer you wait to retire, the more time there is for your savings to enjoy the effects of compounding. For example, Jack starts investing 15% of his $65,000 income at 25 and plans to retire at 67. By retirement, he could have around $2.6 million and plan to live off that until he is 90 years old — if he spends only 90% of his pre-retirement income each year.

Unlike Jack, Anthony prefers an early retirement at 55 even though he makes the same amount of money and also saves 15% of his salary each year. Assuming that he also spends 90% of his pre-retirement income each year starting at 55, his $1 million retirement savings would run out at 65!

Other expected income

In the U.S., apart from personal savings, the average American’s retirement income is usually supported by social security benefits and employer-provided pensions. So to determine how much you need to save by retirement, it’s also important to take into consideration your retirement benefits. If you have these sources of guaranteed income, it’ll help reduce the amount you’ll need to save on your own. Not sure how much social security income you’re entitled to receive? Use this tool to estimate your social security benefits.

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The Four Percent Rule

Another popular rule of thumb to determine how much you should save for retirement is to divide your desired annual retirement income by 4% — also known as the 4% rule. Essentially, it’s a guideline for how much money you can withdraw from your retirement savings account each year without running out of money. So if you plan on spending $100,000 each year during your retirement years, you’ll need to have around $2.5 million in your retirement nest egg to sustain this level of spending.

Keep in mind that the rule is based on a 30-year time period. So if you plan to spend more than 30 years living off your retirement savings, you’ll need a larger nest egg. Also, the 4% rule might not work if you don’t stick to it year after year. An occasional splurge could lower the principal amount in your savings and impact the compound interest you need to sustain your income.

How Much To Save for Retirement by Each Age

According to Fidelity, you should aim to set aside:

  • 1x of your salary by 30
  • 2x of your salary by 35
  • 3x of your salary by 40
  • 4x of your salary by 45
  • 6x of your salary by 50
  • 7x of your salary by 55
  • 8x of your salary by 60
  • 10x of your salary by 67

Of course, as mentioned before, these are just general guidelines. The actual amount you need to save will still depend on factors such as your desired lifestyle in retirement as well as when you expect to leave the workforce. Also, don’t worry if you haven’t reached these milestones yet. It’s never too late to start saving!

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How To Calculate Retirement Savings

For many people, the idea of retirement seems like a distant dream. But with a little financial planning and effort, it can be within reach. Before taking the steps to reach your retirement savings goal, you must first know what that number is.

You can find out the approximate amount of money you’ll need by using online retirement calculators by Vanguard, Forbes, and Charles Schwab. Keep in mind that the numbers provided by these calculators can vary a bit depending on the factors they’ve taken into account. Compare figures from several calculators and decide which number makes the most sense for you.

Ways To Boost Your Retirement Savings 

We get it — saving for retirement can be quite overwhelming and intimidating. Especially after realizing how much money you need to have in your account to retire comfortably. But don’t worry, reaching that ideal savings amount by your desired retirement age is not impossible. In fact, it’s completely doable as long as you stick to a plan and be strategic about it!

Contribute to your retirement accounts

One of the best ways to boost your retirement savings is to contribute to 401(k) or Roth IRA accounts. Both of these accounts offer tax advantages that can help you save money in the long run. For example, with a 401(k), your contributions are made with pre-tax dollars, which means you’ll pay less in taxes now — this can be an attractive option for those who are in a higher tax bracket now than when they retire. On the other hand, with a Roth IRA, your contributions are made with after-tax dollars, which means you won’t get any tax breaks now. But you won’t have to pay any taxes on the money when you withdraw it in retirement.

Take advantage of employer match

When it comes to saving for retirement, every little bit counts. And one of the best ways to fast track your retirement savings is by taking advantage of your employer’s matching program. If your company offers a 401(k) or other retirement plans, they may also offer to match a certain percentage of your contributions.

For example, they may match 50% of your contributions up to 6% of your current salary. That means if you’re earning $80,000 per year and contribute 6% of your salary to your 401(k), your employer would then contribute $2,400. While that may not seem like a lot, it can certainly add up over time. And think of it this way: it’s essentially free money that can help you reach your retirement goals. So if you’re not already taking advantage of your employer’s matching program, now is the time to start.

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Use a budget tracker app

If you’re having trouble sticking to a budget, it might be worth looking into a budget tracker app like Mint or Personal Capital. One of the best things about a budget tracker app is that it can help you see where your money is going and make adjustments accordingly. You can even set up spending limits for different categories and track your progress over time. This can be especially helpful for ensuring that you’re consistently saving for retirement. Not to mention, many budget tracker apps also offer valuable features like goal setting and reminders, which can further help you stay on track.

Start a side hustle

No matter how much you cut back your spending, the amount of money you can save is still dependent on how much money you make. Apart from reining in spending, it’s equally — if not more important — to think of ways to increase your annual income and diversify your sources of income.

One way to do so is to start a side hustle. It can be something as simple as selling handmade crafts, renting out your car, walking dogs for your neighbors, or creating digital products that generate passive income each month. The sky’s the limit. Once you’ve established a successful side hustle, you’ll be able to quickly increase the size and frequency of your savings and investments.

Start Saving for Retirement Today

If you find yourself behind in your savings plan or goals, it’s never too late to catch up and increase your savings. Retirement might seem like a long way away, but time flies and before you know it, those golden years will be here. So start saving today and you can rest assured that you’re doing everything possible to have the retirement lifestyle you desire.

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About The Author


Jamela Adam

Jamela Adam is a personal finance writer covering topics such as savings, mortgages, investing, student loans, and more. Her work has appeared on Clever Girl Finance, Chime, SuperMoney, and Mint Intuit, among other publications.


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