Retirement Planning

How Much Retirement Savings Will You Need?

Many people start dreaming about retirement the day they start working. But making reality match the dream takes planning. Knowing how you can maintain your lifestyle and achieve your retirement goals requires that you answer one big question: How much will you need?

 

Turning the Retirement Dream Into Reality

When it comes to figuring out how much you should save for retirement, it seems there's no shortage of free advice roaming around. Should you aim for having a $1 million nest egg? Or is a good rule of thumb to have a savings that's 10 to 12 times your current income? With all this information, what is a realistic way to gauge how much retirement savings you'll need?

The truth is, everyone's number is going to be different, and factors such as where you live, your health, age, and how long you'll live will all play a part in how much retirement savings you will need.

The following information may not be the magic formula that you're looking for, but it will at least get you thinking about where you might want your optimal number to be.

Begin by asking yourself the following questions about how much you should be saving for retirement:

  • Will you potentially outlive your nest egg? If you're healthy and have a family history of longevity, then you might want to factor in those additional years so that you don't outlive your money.
  • How are your current savings and investments working for you? Are your savings generating enough return? If not, see where you can make adjustments in your portfolio - the sooner the better.
  • Do you plan to “age in place” (remain in the same home when you retire)? If so, will your mortgage be paid off by the time you retire?
  • Do you want to work part-time in retirement (potentially reducing the amount you'll need to save)?
  • Will your kids (or your parents) need financial help from you?
  • Should you consider moving to a less expensive area or downsizing to a smaller home and using home equity for investments or retirement income?
  • And what about that new roof (or other unexpected expenses that will come out of your emergency fund)? Will you pay for that before or after you retire?
  • What will your living costs look like when you retire? Many people are surprised to learn that they could very well end up spending more in retirement than they did when they were working.

The most important thing to remember if you find that you're falling short of your goals is to not give up. Make adjustments where necessary, and come up with a new plan to try and save more.

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax‐related decisions. For information about Protective Life and its products and services, visit www.protective.com.

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.

How Much To Save For Retirement

Wondering if your retirement savings is going to be enough? The fact is, there are many different factors when it comes to estimating how much money you'll need to save for retirement. This article presents some thoughts on what you may need when it comes to building your nest egg. For more information, visit the Protective Life Learning Center.

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