How Much Do You Need to Save to Retire?

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If you bring up the topic of retirement in a crowded room, chances are you’ll get a mixed reaction on how much money you need to make the leap.

Retirement can be an exciting and intimidating prospect at the same time. Naturally, we all want to do what our hearts desire in our golden years, but many of us are still wondering what it takes to accomplish just that.

A commonly asked question is, how much do I need to save to retire? The answer isn’t clear-cut, and there are a lot of factors that can influence the amount of money you will need later in life.

However, there are a few ways to get a ballpark idea. We are going to see how to figure out the amount you need to save to retire.

Determine Your Retirement Income Needs

In order to feel comfortable about your retirement plan, you need to start by determining what your income needs will be. The first factor in the equation is figuring out what kind of lifestyle you want to lead in your later years.

Will you be doing a lot of traveling, or will you take it easy? Do you plan on selling your house and downsizing in an affordable area, or do you want to retire where the cost of living is higher?

When you begin to put together a picture of what life will look like, you can start adding up how much that lifestyle might cost. You should also account for inflation and potential healthcare expenses.

The 4% Rule

So what’s a good rule of thumb? Many financial advisors agree on the 4% standard. That means you can withdraw up to 4% of your portfolio’s value in the first year of retirement, then adjust with inflation in the following years.

Of course, this percentage will fluctuate based on the individual, but it’s a helpful place to start when you’re tracking your portfolio and trying to determine your retirement income needs.

How Much to Save for Retirement by Age

Although it may seem obvious, the earlier you start saving for retirement, the better. Hypothetically, you would want to begin in your 20s and have 1x your salary saved by the time you hit 30.

To reach that goal, a commonly used formula is to save 25% of your salary every year.

If you are able to begin at 25 and follow this guideline, you’ll accumulate 100% of your salary in savings by the time you hit 30.

How Much Should You Save by 65?

The end goal is to ideally have around 8x your salary saved when you retire at age 65.

This table shows your benchmarks by age. Of course, your lifestyle and when you retire might require more or less.

Age X Your Salary

Explore Retirement Savings Options

Perhaps you’re not as far along in your retirement plan as you’d like, or maybe you’re on track but looking to boost your savings. There are various options to explore out there, so let’s examine a few of them and their pros and cons.


If your employer offers a 401K, don’t sleep on it. This type of retirement savings account doesn’t tax your contributions. A certain amount gets deducted from each paycheck and invested into the funds of your relative choice.

Many employers will even offer to match a percentage of that. While this can be a super lucrative plan that’s likely beneficial to you, there may be a few drawbacks to keep in mind. 

The list of investments you can choose from is often limited, and you’ll need to select and manage them with very little to no advice on your journey. However, don’t let that discourage you. A 401K, especially one that matches, is one of the best things you can do to boost your retirement plan.


IRAs are individual retirement accounts that let you defer taxes until you withdraw the money later. They have the potential to grow quite nicely through your contributions and investment appreciation. It’s best to contribute as much as possible to maximize this type of account.

You should be aware, though, that there are limits. In 2023, the contribution cap was $6,500 for individuals under 50 and $7,500 for those 50 and older.  Also, you’ll need to choose your investments and monitor them wisely, so it’s a good idea to consider seeking professional advice before opening an IRA.


An annuity is an insurance contract issued by a financial institution that guarantees monthly or yearly payments in your retirement years until your passing. When you enter this contract, you agree to make a lump sum or periodic payments. It’s a surefire way to lock in steady income in your later years and avoid the fear of your savings running out.

Annuities can come with a few disadvantages. They are not liquid investments, so you typically cannot withdraw them early without penalties. There can also be high fees and commissions associated with this type of retirement savings option.

How to Develop a Retirement Savings Plan

Once you’ve established the estimated amount you will need in retirement, you can formulate a plan even if you’re late to the game. Here are a few tips for setting you on the right path.

  • Start saving as much as you can, as soon as you can. The easiest way to do this is to sit down and create a realistic budget for yourself so that you can stick to it. 
  • Take advantage of options like 401ks and IRAs when possible, and don’t be afraid to ask for help when choosing your investments. 
  • Pay off any outstanding debt if you can. Many people find it helpful to start with the smallest debt they have and work their way up to the largest.
  • Regularly review and adjust your savings plan, and when necessary, make adjustments. It’s good practice to check in once a year or more.

Today is The Best Day to Start Saving for Retirement

Everyone’s retirement is going to look a little different. You have to consider many factors when determining what you need, like lifestyle, health, and inflation, but the goal of starting early transcends all types of plans. You should begin saving and planning for retirement as soon as possible

Don’t stress if you feel like you’re late to the game. While the process may sound daunting, today’s technology makes things a lot easier. Software like StockMarketEye makes managing your retirement a breeze and can help you know if you’re on track or even play catch up. With a little legwork and periodic checking in, you’ll be well on your way to enjoying your golden years.

Ashley Grasse Avatar
Ashley Grasse Ashley Grasse is a research writer that has been saving and investing for retirement for over 20 years. She enjoys a nice cup of coffee, traveling, and spending time outdoors.