How Much Do I Need to Retire?

Your magic number depends on how long you plan to be in retirement, your expected lifestyle and other factors. Here’s how to figure it out.

Written by Ben Luthi / March 17, 2022

Quick Bites

  • Thinking about how you want to live in retirement compared to your lifestyle now is a good start for figuring out how much money you’ll need.
  • Online retirement calculators can help you come up with an estimate based on a few assumptions.
  • It’s more important to develop your savings plan and investment strategy, and reevaluate it periodically.
  • Consider consulting with a financial advisor to get and stay on the right track.

We know: It can be hard to figure out how much money you need for next month, let alone 20, 30 or 40 years from now. But having a goal in mind now makes it a whole lot easier to ensure that you get there when you retire.

It’s not so much about getting that number exactly right—even the best math can’t predict the future—but about developing a good strategy. “The goal should not be to have an accurate figure but to have a reasonable plan that gets you to your goals,” says Jay Zigmont, Ph.D., a Certified Financial Planner and founder of Live, Learn, Plan, a Mississippi-based financial planning firm. “This is the core of comprehensive financial planning.”

Here’s what to consider as you plot out how much money you might need for retirement, as well as tools to help you zero in on a figure that makes sense.

Inside this article

  1. Factors to consider
  2. Calculating your stash
  3. Work with a financial advisor

Factors to consider for retirement

There’s a lot you’ll need to consider when determining how much money you’ll need to be ready to retire. Here’s what should be included in your planning process:

When you want to retire

Age 65 has long been a benchmark for when you should consider retiring, but remember that you ultimately get to decide when you want to leave the workforce.[1] Just keep in mind that retiring earlier means you’ll need to save more to make up for those extra years you won’t be working.

Your retirement lifestyle

Many retirement experts recommend planning to have 80% of your pre-retirement annual income.[2] In other words, if you’ll be making $100,000 in your final year before retirement, shoot for $80,000 in annual income in retirement.

That said, it won’t be easy to estimate that first figure if you’re still years or even decades away from leaving the workforce. So, it might be better to think about the type of lifestyle you want and how much income you’ll need to support that.

For example, do you want to stay where you are now or are you thinking about downsizing or moving to a place with a cheaper cost of living? Do you want to travel? Does your family have a history of needing long-term care? These questions can help you get started in estimating what your future expenses will look like.

Your ability to save

Fidelity Investments recommends saving 15% of your gross income toward retirement.[3] But depending on your financial situation, that might not be possible. On the flip side, 15% might not be enough to achieve your retirement goals, especially if you started saving later in life.

Think carefully about how much you can reasonably set aside for retirement, both now and over time as your income and expenses change, and try to find a good balance between your retirement expectations and your current budget.

Assumptions about economic conditions

When calculating how much you need to retire, experts must make a number of assumptions about the future, including how well the financial markets will perform, how much inflation will reduce your purchasing power, potential changes to tax rates and more.[4]

Tip: It may be a good idea to consult a financial advisor about economic forecasts, so you can get a better estimate of their impact on your finances for retirement.

“Your retirement plan needs to take into account a variety of both best and worst cases,” says Zigmont. “You can be conservative with your assumptions, but it is possible to also be too conservative.”

All sources of income

Depending on your situation, you may not have to take all of your retirement income from your savings. For example, Social Security income can make up a chunk of your monthly income. You can get an estimate of what your Social Security income will look like by setting up a mySSA account.

Other potential sources of income may include a pension, annuities, an inheritance, real estate income, income from bonds, dividend stocks and similar securities and more.

Calculating your retirement stash

Once you have an idea of what your income and expenses will look like in retirement, you can use an online retirement calculator to determine how much you’ll need to save every year to achieve your goal.

Here are a few scenarios using Charles Schwab’s retirement calculator based on what your lifestyle might look like compared to your current one.

In each, we’ll say that you’re 40 years old earning $80,000 per year, you’ve already saved $450,000 for retirement, you put 15% of your income toward your 401(k), and you plan to retire at age 65 with a moderately risky approach to investing.

Less income

In this scenario, you plan to live on 80% of your current income, which is $64,000 per year. With this goal, you’ll have more than enough to reach your retirement goal. With your current plan, you could even retire a couple of years sooner.

Same income

In this scenario, you want to match your current salary of $80,000 in retirement. Unfortunately, you’ll be short by a few hundred thousand dollars with your current plan. Options include delaying retirement until you’re 68 years old, increasing your annual retirement savings from $12,000 to $17,700 or reducing your income expectations to $72,000.

More income

If you want 120% of your current income, or $96,000, you’ll be more than a million dollars below your goal at age 65. Alternative approaches can include delaying retirement until age 71, increasing your annual retirement contribution to $29,200—which may be impossible for your situation—or lowering your expectations.

Of course, these calculations don’t account for possible increases in your income, which may result if you increase your retirement contributions. In all scenarios, you can also adjust your investment strategy to a more aggressive approach, which could potentially improve your returns.

Tip: No retirement calculator is perfect, so you may need to use multiple calculators to get the right figures.

Work with a financial advisor

Retirement planning is complicated, and while rules of thumb and online calculators can help you estimate your income needs and savings goals, there are so many variables that it can be daunting to do it on your own.

Even if you feel confident in your planning and estimates, it’s impossible to predict the future and how economic conditions may impact your retirement strategy.

So it might be worth consulting with a financial advisor who can help you navigate these muddy waters. In some cases, you can even have the advisor manage your retirement portfolio on your behalf, so you don’t need to worry about managing and reevaluating your strategy by yourself.

Regardless of how you approach saving for retirement, the important thing is that you take the time to research and understand the process and create a meaningful plan now, so you can sit back and relax in your golden years.

Article Sources
  1. "Age 65 Retirement," Social Security Administration,
  2. “Taking the Mystery Out of Retirement Planning,” U.S. Department of Labor,
  3. “How Much Should I Save for Retirement?” Fidelity,
  4. “Retirement Planning Tools,” Society of Actuaries,

About the Author

Ben Luthi

Ben Luthi

Ben has been writing about money since 2013. He's been on staff at NerdWallet as a credit card writer and for Student Loan Hero, where he covered student loans and other personal finance topics. Ben's work has appeared in U.S. News, The New York Times, Experian, FICO, Credit Karma, Bankrate and more

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