How much do I need to retire comfortably?

Jeanne Tackett |

How much do I need to retire comfortably? 

Everyone wants to retire comfortably but do you have enough to sustain the lifestyle you want? In retirement, you are living off a fixed income from your retirement savings accounts. It is difficult to estimate how much you will need to cover your expenses and have money left over to not feel financially strained. Keep reading for insight on how to decide how much money you need saved up to retire!

Start by Estimating your Expenses

One common rule for estimating retirement expenses is around 80% of the money you spend on expenses currently. The 80% is based on the idea that most of the major expenses you incur will decrease or disappear, including commuting to and from work and adding to your retirement savings accounts. While these costs may go away, you may be spending more on travel and healthcare-related expenses. 

How do you want to live? 

Decide what your standard of living is in retirement; is it how you are current living or different? A good way to measure what this will look like monetarily, use your current standard of living as a base. Subtract expenses that will diminish by that point in your life and add in new ones. This calculation should give you an idea of what you need your retirement income to be. 

How much do I need? 

The overall rule of thumb is the 4% sustainable withdrawal rate. This means the 4% of your overall retirement savings is what you can withdraw each year to have your portfolio last at least 30 years. For example, if you have $1,000,000 saved up in your retirement funds, you can withdraw $40,000 per year. From here, take your estimated monthly expenses and divide it by 4%. The outcome will provide an idea of how much you need to save. 

How much will you gain on your savings? 

If you have your retirement savings in stocks, bonds, or growth accounts, you should be earning compound interest. While each account should give you a specific rate of return, you should estimate your actual rate of return lower to account for inflation. 

Consider all of your Income Sources 

While you may have personal savings accounts, 401(k)s, and IRA accounts, you will also want to consider if there are any pensions and Social Security money you can receive. The earlier you take Social Security benefits, the lower your monthly payments will be. You are able to estimate your Social Security benefits on the Social Security Association’s website. 

Consult with an Advisor 

An advisor will be able to analyze your current savings, what you are on track to save, and what you need to do differently to reach your retirement savings goals. They can also provide advice on how to save more money for your retirement based on your current income. The best way to save money for your retirement is being proactive and starting to save early! 

Saving for retirement does not have to be stressful and scary. If you have any questions, please reach out to us. We are happy to help you maximize your retirement savings.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss. Investing involves risk including loss of principal.