When planning for your retirement, you may be wondering, “How much do I need to retire?” The answer depends largely on your current income, when (or at what age) you want to retire, and the lifestyle you want in retirement. However, knowing how much you need to save based on your age is a good way to stay on track.

A key benchmark that is often quoted by Fidelity to its 401k and brokerage clients is to save 10 times your salary by age 67, but there are other savings benchmarks we’ve discussed in this guide that you can use as a guideline.

How Much Do You Need To Save To Retire?

When determining how much money you need to retire, a common guideline is you should aim to replace 70% of your annual after-tax (take home) income using a combination of Social Security benefits, investments, pension and annuity income sources, and your liquid bank savings.

It’s also important to remember that there are expenses that don’t go away when you retire, so take them into consideration when making a budget.


Consider the lifestyle you’d like to maintain in retirement to determine the money for retirement you’ll need. Take a closer look at your current expenses and how they may change once you retire.

For example, your commuting costs will be lower, but you can expect to spend more on healthcare. Consider if you’ll be able to pay off your debts while you’re working or if it would benefit you to refinance your mortgage if you can reduce your interest rate and/or shorten your mortgage loan’s term (from 30 years to 15-20 years) to pay your home off earlier. 

There may be other significant expenses that you wouldn’t have accounted for, such as helping a child through college, a major home repair, or a renovation if you plan to sell in the future.

If you’d like to travel more in retirement, you’ll also have to take those expenses into account. For some retirees, expenses related to entertainment, dining out, socializing, and hobbies may increase because you’ll have more free time on your hands each day.  

Healthcare Expenses

To answer the question, “How much money do I need in retirement?” you’ll also have to consider your future healthcare needs. An average retired individual aged 65 may need to save $157,500, in today’s after-tax dollars, for healthcare needs in retirement.

While some of your healthcare needs may be covered by Medicare and long-term care (LTC) insurance (if you have purchased LTC coverage), you’ll have to account for out-of-pocket costs for assistance services you may need as you get older, such as in-home care services, caregivers, and home health aides.


Inflation is also an essential factor when trying to calculate how much money you will need to retire. Prices of goods and services increase over time, which decreases the purchasing power of your money over time. Most financial advisors suggest assuming a 3% inflation rate for retirement planning.

Location is also an important factor to consider when planning for retirement. The cost of living, as well as income and property tax rates, can vary depending on the city, county, and state in which you live, so where you plan to retire will also impact when you retire and how much money you need to save for retirement.

How To Calculate How Much Money You Need in Retirement

At this point, you may be wondering, “How much money do I need to retire?” The short answer is, “It depends” because there are several approaches that are available for you to use. Here are three ways to estimate the savings you’ll need.  

Use The 4% Rule For Account Withdrawals

The 4% rule is a framework that works under the theory that you can safely withdraw 4% of your portfolio’s value at the end of the prior year, consistently each year, starting right from the first year of your retirement on through to your last. If you spend money wisely and keep your subsequent withdrawals consistent with the 4% withdrawal rate, you shouldn’t run out of money.

The idea of the 4% rule is that your after-tax investment earnings and capital appreciation in a balanced “moderate-risk” portfolio of stock and bond investments should provide sufficient growth over the long term to allow your retirement and general investment and savings accounts to not only stay ahead of inflation but also maintain enough of their value to meet all of your future annual withdrawals, in perpetuity. To find how much you need to save to get started, a good rule of thumb is to multiply your estimated annual spending by your estimated years in retirement.

For example, if you need $50,000 in after-tax income annually throughout your retirement and you anticipate your retirement to be 20 years long, you’ll need to save up and invest an initial retirement savings of at least $1 million.

Use Retirement Calculators

Another easy way to estimate how much you need to retire is using an online retirement calculator. These calculators can estimate the retirement nest egg you’ll need based on your savings contributions, your long-term average inflation rate assumption, your long-term average investment returns, and other factors. Here’s a step-by-step guide to using one:

  • Fill out the information in the visible fields. You can use an estimate if you’re not sure of some values.
  • Fill out your annual pretax income, current retirement savings, monthly contributions, your other expected retirement income amounts, and your monthly retirement budget.
  • You can also fill out the optional advanced fields, such as retirement age, life expectancy, inflation rate, average rate of return, and annual cost of living adjustments for your pension, Social Security, and annuity income (if any).
  • The calculator will then provide you with an estimate of how much money you’ll have in retirement and how long your savings will last.

Seek Professional Financial Help

Brad Reichert, a financial expert and the founder and managing director of Reichert Asset Management LLC, offers this advice for retirement planning: 

“It’s always a good idea to search for an experienced, licensed Certified Financial Planner™ (CFP®) practitioner in your area and work with them to complete a financial plan and retirement income analysis when you’re three to four years away from your desired retirement date,” he shares. 

“In addition to running detailed investment and retirement projections for you, your CFP advisor will be able to identify areas of excessive risk or deficiency within your overall financial situation,” Reichert explains.

Working with a financial advisor can also be particularly helpful if you’d like to get personalized money management guidance and advice on complex financial issues, investment strategies, information about potential insurance needs, and assistance in determining your retirement goals based on your current age.

How Much Should You Save for Your Age

Another question many people have is, “How much should I have saved for retirement by age 40, 50, or 60.” Having a precise savings target based on your age has a number of benefits. For one thing, it allows you to figure out how much to contribute to your 401(k), your IRA or Roth IRA, and to your other savings and investment accounts each month.

For many people, it’s important to have a savings target instead of a date. For example, the premise of the financial independence retire early (FIRE) movement is to work until you reach a certain savings target, not until you reach a certain age.

You can also base your savings goals based on the average retirement savings by age in the U.S. and use these numbers as a financial “yardstick” against which you can measure your own personal retirement savings from year to year.

AgeAverage Retirement Savings
Under 35$49,130
35 to 44$141,520
45 to 55$313,220
55 to 64$537,560
65 to 74$609,230

Percentage of Your Salary

It can also be useful to think in terms of putting aside a percentage of your salary towards retirement. A popular approach is to save 15% of your gross salary for retirement starting in your 20s.

This will include your savings across all retirement accounts and employer contributions if you have an employer-sponsored plan that provides matching contributions.

Target Retirement Savings Benchmarks

Another recommendation is to save 10 times your after-tax pre-retirement income by age 67 in order to carry and maintain your current lifestyle into your retirement years. While this amount may seem overwhelming, you can follow age-based milestones to stay on track over time:

  • 1 time your income by 30
  • 3 times your income by 40
  • 6 times your income by 50
  • 8 times your income by 60
  • 10 times your income by 67

These milestones are good checkpoints at which to start building, and then keep growing your retirement savings and ensure you’re on the right track.

Where To Keep Your Retirement Savings

If your job offers an employer-sponsored plan, that’s the best place to start your retirement savings. You can fund your Traditional 401(k) or 403(b) plan to get an employer-matching contribution and receive a tax break on your contributions. 

You can also fund your Roth 401(K), if you have one available to you, to get employer-matching contributions and receive a tax break on your withdrawals later on in retirement.  This will give you the extra cash you need to invest and grow. Maxing out your 401(k) is also a good strategy if you have extra funds to put to work each month.

If you don’t have a 401(k) or 403(b) plan at work, or you need to save more than what the plan allows, consider Traditional IRAs, Roth IRAs, and regular brokerage accounts as supplemental ways to save.

Start Saving Early and Minimize Debt To Retire Comfortably

One of the best ways to ensure financial freedom in retirement is to start saving early. If you have debts that are making it difficult to save, pay them down to make room in your budget.

How much do you need to retire? That amount of money you’ll need depends on your lifestyle goals and projected retirement expenses, your personal investment risk tolerance and optimal investment mix, your other fixed-income sources (like pension and Social Security benefits) in retirement, and whether you plan to work part-time at some point during your retirement years. Use one of the benchmarks we’ve discussed in this guide, try to get as close as you can to your savings goals, and assess your progress frequently.

Use a tax-advantaged retirement savings account such as a Traditional IRA, Roth IRA, or tax-deferred annuity to make the most of the money you save.