How Much You Should Save For Retirement?

Many retirees struggle to bridge the gap between their current savings and their goals when planning for a comfortable retirement. Some do manage to stash away substantial amounts, but their monthly contributions often fall short of what’s needed to reach their target.

In a recent survey from Capitalize, respondents stated they’d need $1.8 million to retire comfortably. Yet, on average, they only contribute $448 per month toward retirement savings. “That shortfall in retirement savings may also be why one-third of Gen Zers and millennials surveyed plan to work past their traditional retirement age or why over half rely on cryptocurrencies to boost their nest egg,” said Stang Gappa, director of growth at Capitalize, in an email.

That’s why it’s a good idea to set a target retirement savings number and a carefully crafted long-term investment strategy. To help you determine how much you’ll need to retire, begin with these pointers.

— Factor in age.

— Emphasize guidelines.

— Save aggressively.

— Don’t count on Social Security.

— Be frugal.

— Factor in expenses.

— Build a budget.

— Save your windfalls.

— Partner with a pro.

Age Is the Biggest Factor

The sooner you begin saving, the less you’ll need to save to stay on track, thanks to compounding interest. Although the average median retirement age is 62, it’s worth remembering that the earlier you retire, the longer you’ll have to rely on your retirement savings.

Let’s say you have a starting salary of $75,000. Using the U.S. News retirement calculator, here’s what you would have saved by age 62 after contributing $750 per month to your retirement account beginning at various ages, assuming an annual income increase of 2% and a preretirement rate of return of 6%.

Age You Begin Saving Savings at Age 62
22 $1,817,478
30 $1,027,990
40 $462,950

[Related:What Is the Average Retirement Savings Balance by Age?]

Prioritize Guidelines and Goals

While it’s difficult to set and meet specific dollar amount goals for retirement, it’s OK to have a big target. The Trinity Study, a notable study from over 20 years ago found that by starting with an asset base of 25 times your current spending, you’d be able to withdraw 4% every year with a minimal probability of running out of money within a 30-year time frame, Gappa said.

Studies like the Trinity model can be helpful guidelines, but they aren’t hard and fast rules. “Your retirement may look different, so even though this won’t give you an exact number, the principles still apply,” Gappa added. “You want to make sure you save enough to support your spending needs — modest or expensive — throughout your retirement, whether that’s 30 years or longer.”

Save More Than You Think You Need

It’s a good idea to plan on saving more than you think you will need since taxes, health care and the cost of living will only keep climbing. “Aim to save for 10 more years of expenses than you first anticipate and make sure you are increasing how much you save 2% (to) 4% every year,” said Kelly Ann Winget, founder and CEO of Alternative Wealth Partners, a Dallas-based private equity firm, in an email.

For example, if your goal is to retire at 60, you will need 25 to 30 years of income saved or invested and generating additional income. To have $100,000 annually in retirement, you will need $6 million or more. “Retiring in 30 years is going to be very different and a lot more expensive than for our parents,” Winget added.

Don’t Expect Social Security to Do the Heavy Lifting

Retirement savers should have at least one firm rule: Don’t count on Social Security as a retirement windfall.

“Although Social Security is a source of retirement income for most individuals, it should not be viewed as the only source of income you rely on in retirement,” said Theresa Cagle Fry, manager of retirement and education planning at financial advisory firm Benjamin F. Edwards & Co. in St. Louis, in an email. “Social Security was designed as a supplemental source of income to be used in combination with your own personal and retirement savings.”

The numbers bear that sentiment out. The average monthly retirement benefit is $1,866.44, or about $60 per day, according to the Social Security Administration’s April 2024 statistical monthly snapshot. “Even if you are only spending $20 a day on groceries, that is a third of the average worker’s Social Security benefit,” Fry said. “Consequently, it’s easy to see how when you factor in other essential expenses for housing, utilities, transportation and health care, Social Security alone is not enough.”

[Related:How Long Will Your Retirement Savings Last]

Plan on Living Frugally

The secret to building wealth is living below your means.

“You need to be clear on the income coming in and the expenses going out,” said Melissa Murphy Pavone, director of investments at Oppenheimer & Co. Inc. in Westhampton Beach, New York, in an email. “Pay yourself first and count on the results of compound interest.”

As your income increases, lifestyle inflation creeps in, so you’ll be urged to spend more as you make more. “Instead, save more,” Pavone said. ” Invest the difference. Your future self will thank you.”

Factor in Essential Expenses

Even small expenses can add up. “Essential expenses are typically those things you need to budget and plan for, such as your housing, utilities, transportation, health care, debt payments and groceries,” Fry said.

If a meal costs $10 today, and you eat three meals each day during a 30-year retirement period, you’ll need $328,500 for your meals in retirement, Fry noted. “If you’re married, double that to $657,000 if you want to eat.” Retirees should also consider the impact inflation will have on those $10 meals.

Of course, you may not spend $10 on every meal, and where you live can determine how much food and other essential expenses cost.

[READ: 10 Costs to Include in Your Retirement Budget]

Create and Maintain a Simple Budget

A practical budget is essential for managing your finances and increasing your odds of a stable retirement.

“One of the most simple and effective budgets is the 50/30/20 rule,” said Meade. “With this rule, you should be spending 50% on essential expenses, 30% on discretionary expenses, and 20% toward your goals.”

Save Your Raises, Bonuses and Inheritance Money

One of the biggest hindering factors to retirement goals is lifestyle inflation, which occurs when expenses increase as income grows.

“This is a double whammy because not only are you not saving as much, but your expenses are growing too, so the lifestyle you are accustomed to will cost more in retirement,” Meade said. “A way to avoid that is by saving and investing the majority of any raises, bonuses or other large sum amounts you get. This can be relatively painless because when you make these changes as they occur, it is ‘out of sight, out of mind,’ as you never get used to having this income to live off versus having to make budget cuts later.” Another way retirees should save money is by opting into their employer’s 401(k) match program if it offers one.

Partner With a Pro

Don’t underemphasize the importance of working with a financial professional, especially when planning for financial freedom.

“A financial planner can provide personalized guidance tailored to your financial goals and risk tolerance, helping you navigate the complexities of the market and help answer the million dollar question: How much do I need to save to be financially free?” Pavone said.

More from U.S. News

Should You Let AI Manage Your Retirement Plan?

10 Places to Retire Abroad on Social Security Alone

Ask a Financial Pro: The Future Seems Uncertain. What’s the Point of Saving for Retirement?

How Much You Should Save For Retirement? originally appeared on

Update 06/06/24: This story was published at an earlier date and has been updated with new information.

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