How Much Money Should I Save For Retirement?

by Craig Moser on December 28, 2018

I’m often asked “How much money should I save for retirement?”  Well, your journey toward retirement has twists and turns unique to you.  Likewise, your retirement goals are probably different from mine and that of your neighbors’.  Although there isn’t one precise answer, there are 4 guidelines that may help.

  1. If you’re like most people, Social Security probably provides the base for your retirement income with the rest coming from savings.   A general rule of thumb is to save enough to replace 50% of your pre-retirement income, including Social Security.


  1. Just like planning a road trip, you need to know where you want to end up. Setting a destination allows you to take the best roads to get you there.  One simple way to determine your retirement savings goal is to save 1X your current income by 30 years old, 3X by 40, 6X by 50, and 8X by 60 and 10X by age 67.


  1. The more you’re able to save, the more confident you’ll be in your ability to maintain the retirement lifestyle you want. One way to do that is to save at least 15% of your pre-tax income each year of your working life.  The 15% includes all your retirement savings across different accounts, as well as any employer contributions you might receive.


  1. Making withdrawals from your retirement savings accounts is a delicate balancing act. You want to draw enough that you can enjoy the lifestyle you envision.  At the same time, you don’t want to withdraw too much and risk running out of money.  One guideline is to limit withdrawals to 4% to 5% of your initial retirement savings.  You will need to keep increasing that amount based on yearly inflation.

Retirement Age and Social Security

As with most things in life, these guidelines are directly impacted by several factors.  And a primary factor is the age at which you retire.  Americans retire at an average age of 62.  Ironically, 62 is also the earliest age you can begin claiming Social Security benefits.  But postponing your benefits can increase your monthly benefit by 8% every year you delay, up to age 70.  This strategy can also extend the length of time your retirement savings can grow, and reduce the number of retirement years.

While you may not be able to pinpoint exactly how much money you may need during retirement, you probably know at what age you want to retire.  To help learn more about retirement age and social security, download Understanding Social Security from the Learning page of our website.

How Much Money Should I Save for Retirement?

When looking at these guidelines, keep in mind they assume you don’t have a pension, continuous employment, uniform wage growth, and that you increase contribution amounts with the wage growth.  As stated earlier, individual circumstances are different and often change with time.

It would be much easier if there was a firm answer to how much money you should save for retirement.  But there simply isn’t.  To get a sense of where you stand, and develop an individual retirement plan, please feel free to reach out to me, or speak with your Financial Advisor


Ready to get MORE out of your retirement?

Kickstart your retirement plan by requesting our complimentary MORE toolkit today.
Here's what you'll get:

Customized Social Security Benefit Summary
to help maximize the payments you are entitled to

Financial Organizer
to summarize all aspects of your financial affairs

Portfolio Evaluation
showing how your investments have performed historically and the fees that you are paying

Show Buttons
Hide Buttons