How Much Do I Need To Save For Retirement?

According to the Social Security Administration, the average person can expect to live to be around 85 years old. Assuming that your target retirement age is 65, that means you will need to plan for at least 20 years of retirement.

Most people will need somewhere between 80-100% of their annual income to keep up with the cost of living in retirement. In order to get a ball park idea of how much you’ll need to fund your retirement, take your annual household income and multiply that by 20 years.

The average household income is around $74,000. If we subtract the average Social Security income amount of $16,000 that means you would need $58,000 per year to pay for retirement. That’s a total of $1.3 Million dollars needed for retirement. If you have a working spouse that has paid into Social Security, the total needed goes down to around $930k.

Assuming that your mortgage and other large debts are paid off around the time that you retire, you’ll most likely need less in retirement than your current annual household income. In my opinion, it’s always better to have more than you need than not to have enough. Investing for the future is best started early, but it’s never too late to get started. Remember…your future depends on the decisions you make today!